12/3/17

Back when I was applying for ER associate positions, I was really struggling. Only a handful of positions per year opened in my industry, so I got very good at making the most of each application. I got to the point where if there was an opening, I had a 50% chance or better of landing the interview.

Here are 3 tips which were game-changers for my applications. When I made these changes, my percentage of replies and follow ups increased noticeably. Note that I would always personally contact the analyst through e-mail and never went through HR.

1. Pass CFA Level I

I've seen a lot of discussion on here about usefulness of the CFA. It's not a question of CFA or no CFA. If you just pass Level I, you will get a lot more attention from employers - you don't need the whole CFA this early in your career. Great if you do have it, but CFA Level I is enough. The great part is that it's really easy. Level I basically tests whether you learned what you should have learned in undergrad business school. Yes, sadly the pass rate isn't that high.....

2. Attach a model

Create an intensive model. Something that is going to take you weeks to build. It doesn't have to be correct. The model just has to show that you are putting in the work and are thinking critically about modeling issues. If someone flips through the tabs for 30 seconds, they should recognize that the model took a lot work, is very well organized, and its is thought out. In hindsight, the models that I sent were 100% wrong for my industry. Nonetheless, they still got me more interviews.

3. Writing Sample

Send a writing sample preferably something published somewhere whether it's an academic journal, the school newspaper, Huffington Post, whatever. I can't stress how important writing is to the job. I would rather hire someone from a target school that could write really well than someone from Harvard with a 4.0 and no writing ability. That's one reason that you will see a lot of non-targets in ER. You need a very specific combination of skills. for ER Just because you went to a target doesn't mean you have that exact combination.

If you do the above, you have shown that you know finance, know how to model, and can write. That should really check all of the boxes for any ER analyst looking for an associate. If there is more interest, I'll try to write one of these ER-related posts each week. Please do recommend any other topics of interest.

Comments (44)

10/25/17

Great post. Agree with all 3. Did #2 and 3 myself.

For another topic, I'd be interested in hearing your opinion on what fresh hires should be doing for their first months/years to maximize their time and increase chances of promotion. Not sure how long you've been in the industry but if you could talk about that, that'd be cool.

Financial Modeling
10/25/17

ER has low turnover, so don't expect to be making the move from associate to analyst for a while
but in the years that you work as an associate, do whatever you can to make your analyst's life easier and make as few mistakes as possible and you'll be good
varies from analyst to analyst, but they all will expect you to perform different roles...some will want you to be just an excel monkey, some will want you to do more of the report writing, and some will expect you to focus more on client requests

10/25/17

Yeah, I don't expect it for another couple of years to be honest. Any tips to establish a small client base even as an associate? Or is that something I should not be focusing on yet?

10/25/17

True but most ER people can still be AVP/VP-type titles that are considered below a research analyst. In my opinion I think most BB ER people want to move to the buyside for more autonomy and less effect of mifid.

10/26/17

agreed...so looking for ways to advance really just means making yourself more attractive to the buy side...going above and beyond when dealing with client queries, providing them with pristine, error-free models, networking on your own time, etc.

10/25/17

Piggybacking on the 3rd point, if you do a report make sure to give a rating (Buy, Hold, Sell).

I've had a couple of people connect with me on LinkedIn and send reports they have completed, and sometimes it's a little more than a typed of version of the 10-k and highlighted risks and no recommendation.

Providing a writing sample is a good idea, just make sure it highlights your ability.

10/25/17

On point #1, the CFA Institute actually has an exclusive job board. You become a member when you register for the exam.

I actually found my current job in ER through there.

10/25/17

I'm not even an ER analyst yet. Just some BO bloke spreading financials and using vlookup. How do someone like me start learning financial modeling for ER?

Best Response
10/25/17

@ ALL

R-E-A-D. That is what this industry is built on.

I'd read intelligent investor, Barron's, WSJ, NY Times, Valuation by McKinsey, Rosenbaum and pearl, Buffett's accounting notes, 10-ks, shareholder letters, Wall Street Prep, and research reports from BBs. Probably some others I've missed but this will be plenty for a 1 month binge. Credit Suisse HOLT has a case competition that anyone can sign up for and you get access to their HOLT platform.

@monkey10011 Practice with comps and DCF. You will rarely use LBOs, if ever. Write an ER report and have ER people poke holes at it until it is solid.

CFA is solid but you need experience too. ER or AM is ideal but don't look down PWM as a freshman or sophomore. Maybe you could work at a BB PWM and write research reports and macro newsletters for the FAs. CFA cannot and will not replace the use of networking and experience. CFA job board works for those who are competent and not just bookworms and passed the cfa with no experience.

DON'T BE A PRESTIGE WHORE! There are plenty of solid ER and AM shops that aren't the BBs and still are good experience for someone trying to get in/lateral from a non-er gig. Not to mention they're not required to be in NY so the pay and lower COL is nice.

Honestly, ER is a "do your homework" type of industry. I don't know why people trying to break in haven't figured that out. It's not a prestige fest where a bunch of schmucks from an ivy can get in just because of their school like ib. Don't get me wrong though, ER and AM do recruit at ivies but will give non-targets that crush the interview a chance over the ivy kid who can't pitch a stock.

I still believe Asset Management is better but you have to start somewhere right?

10/25/17

This is on point. Just hustle.

Try udemy.com, they have basic modelling courses to get you started.

10/25/17

Seriously, this shit isn't rocket science. Spend 100-150 hours spread over a month and you will know everything you need.

10/25/17

What's your opinion on the saying that it's not about "what" you know but "who" you know in sell-side ER? Is good research enough to compensate for not being part of large corporate networks (given that almost all asset managers have their own research team anyway)?

10/25/17

Lol depends on the context of the question. If you're talking about recruitment then networking is obviously important considering how tiny the industry is for BB ER. On the job who you know means close to nothing if you're a terrible research associate.

Also, read Best Practices for Equity research by James Valentine. It is a very good book.

I think people here want to be spoon fed the answers without putting in the work. This isn't ib where you can just regurgitate the common answers from the wso guides.

12/3/17

Everything Bill has said is on point. Thanks for sharing this with everyone, it is good to see ER getting more respect on here recently.

I also second everything in the post. In my interview, my analyst asked me to send a writing sample. I had made an ER report that I passed along and I think it went a long way in the decision process. ER isn't meant to be an in and out in 2 years business model like it is in IB. An analyst is making an investment in you and really wants to see someone who demonstrates a willingness to go the extra mile and an interest in the space. Turnover is lower in ER and it isn't unusual for associates to stick with analysts for 5+ years.

10/25/17

Thanks for the thorough answer. Im currently on chapter 5 of the intelligent investors. Takes me a while to read, because I tend to take a lot of notes

10/26/17

No problem. Be on the lookout for some recruiting/ER threads by me when things die down in December. Target kids will be pissed lol.

Financial Modeling
10/27/17

This is what I did - got me my first job as an Associate. I noticed that if an Analyst (or senior Associate) took the time to read my report/models, I at least got a phone call back (and always skipped HR).

My background: non-target, 3.2 GPA, no connections, no-name internships. If I can do it, any of you can. Just keep swinging the bat and you'll hit a homer.

10/27/17

[deleted]

10/28/17

I was told by one guy in ER that working in a mutual fund for a year would be another avenue in. Whats your take on that?

10/28/17

If you can get a research role at a mutual fund, you should be able to easily make a transition to equity research with the caveat that you also have decent writing skills.

That said, you might then just want to stay at the mutual fund...Most people in ER hope to exit-op to the buy side so jumping from a mutual fund to ER is sort of going in the opposite direction, although I have seen it done occasionally.

Also, keep in mind that if you're an undergrad with no considerable experience, it's usually easier to get an ER associate position with no experience than a mutual fund research role.

10/28/17

This is my story. I'm a 31 y/o medical doctor with a couple years of clinical experience looking to jump into biotech equity research. I found a small private ER firm to write equity research reports for in biotech as I do some healthcare consulting work for an entrepreneur. I can write as I was a philosophy major and I am published in medical research. I feel confident selling myself and jumping on a phone pitching (as I did real estate sales in my year off before med school).

I see tons of PhD's in equity research and no disrespect to them, they can research like the best of them given their experience. However, I would have thought a medical doctor with extensive training and clinical experience with pharmaceuticals would gain more attention in this field. I was told by a ER analyst that don't expect them to make any assumption so just put it down on your resume that you have prescribed pharmaceuticals in nephrology, cardiology, oncology, neurology, etc sub-sectors all of which are true.

Anybody else have any idea how I can leverage my experience?

10/28/17

@alyeshmerni"

With a background like that, ,you should be slam dunk candidate for biotech. So, I'm not sure what's holding you back. How long have you been on the search for an ER position?

The only thing that I think you would have to prove as a candidate is that you really want to do this and that you're willing to work for less comp at the start of your ER career because it's going to be a while before you make a MD-equivalent salary. If you look at companies like Novartis, half of their 30 or so analysts are MDs or PhDs.

On a side note, personally I would just stay in medicine unless you just absolutely hate it or something like that. ER comp can be better way down the road but it also comes with considerable risk, It's the Hunger Games every year in the business and the hours aren't that much better.

10/30/17
NoEquityResearch:

@alyeshmerni"

With a background like that, ,you should be slam dunk candidate for biotech. So, I'm not sure what's holding you back. How long have you been on the search for an ER position?

The only thing that I think you would have to prove as a candidate is that you really want to do this and that you're willing to work for less comp at the start of your ER career because it's going to be a while before you make a MD-equivalent salary. If you look at companies like Novartis, half of their 30 or so analysts are MDs or PhDs.

On a side note, personally I would just stay in medicine unless you just absolutely hate it or something like that. ER comp can be better way down the road but it also comes with considerable risk, It's the Hunger Games every year in the business and the hours aren't that much better.

I've been looking for 1-2 months, very hard the last month though. I'm writing equity research reports for a private firm which also features them on seeking alpha. I'm learning financial modeling and trying to build a model for Johnson and Johnson. I have offered to reduce my salary, even mentioned I would work without comp (but that was as an add on once I failed to get the job). The MD actually really tried to bring me on this way but was halted by upper management.

Any other ideas?

10/30/17

I think that mainly you just need to give it some time. 1 -2 months is a very short period for an ER job search. You shouldn't feel distress at all at this point. A time frame of 6 to 12 months or even 18 months isn't entirely unreasonable for ER recruitment because very few positions open up. If you're getting one solid interview every month or two, that is not a bad pace at all.

Another consideration is that you might want to beef up on your finance skills. My suggestion above of getting the CFA Level I would probably be a good idea. It would prove to employers that you have the pre-requisite finance background to the job. Even as a less familiar topic area, it shouldn't be too hard compared to studying involved in medicine

10/30/17

By looking at the CFA Level 1 next test I can register for would be June 2018. I have minimal finance background. Is it reasonable for me to succeed in this test? I've heard its very challenging even for people with a finance background.

11/1/17

Background: Family of Doctors, In Finance, passed CFA Level 1

The CFA Level 1 is a joke. If you were able to take the MCAT and get into a reputable medical school, you will be able to pass Level 1 with no problems.

It is pass/fail and Level 1 is multiple choice. Pass is something between 60-70% if I remember correctly and with 240 questions you can get a significant amount wrong and still be comfortable in the pass range.

Levels 2 and 3 are significantly harder. I hear Level 2 is even harder than 3. When you hear it's challenging - you are probably hearing about getting the CFA designation which involves passing all 3 levels.

Getting Level 1 will just signal that a) you 100% know the basics/fundamentals of finance since the Level 1 goes an inch deep on a wide variety of topics and b) that you are serious about this career transition since you took the time to study and pass the test. Furthermore, in an interview you will be able to point to it whenever anyone has doubts on your knowledge or capability.

Everyone you interview with is going to be asking themselves whether you are actually in it for the long-term. If not, any upfront time or capital cost of training you won't be paid back. I couldn't help but laugh at your comment about offering to work without pay. Pretty standard hail-mary for those trying to break in but I have never seen it work. While it sounds logical from your end, it can also reek of desperation.

And yeah there are a lot of PhD's but a few MD's as well. I think a lot less MD's because all PhD's have done is research whereas, from my understanding, the training to become MD is a lot of memorization and knowledge-building. Plus, a lot of kids who go through the MD path have wanted/thought they wanted to be an MD since they were in High School or earlier. And the steps are laid out very neatly (crush standardized tests and grades and continue going to the next step such as college, med school, residency, etc.) Getting a job in finance outside of the natural paths (on-campus recruiting, IB-> buyside) is anything but neat. It seems that you may be realizing a little bit of that now.

But yeah, I'd keep hitting the pavement and being patient. But I'm also curious why you want to join this business and why now? How many years out of med school are you? Do you have a prior interest in public markets or investing you can point to? What is your long-term goal? Buyside?

I would ask yourself these questions because I find that a lot of people tend to suffer from "grass is greener" syndrome. As someone from a family of doctors who is the only person to go into finance, I am curious as well and would love to hear your thoughts.

11/1/17

I've always had an interest in the public markets since I was a kid. My long term goal is buyside. Ultimately I love that finance is performance oriented and medicine is completely not. Doctors that do a better job don't get rewarded for it, only penalized if something goes wrong. I put 110% into everything I do. I love medicine and will for the rest of my life. I also like numbers, metrics, and projection. Pharma and metrics, research and analysis = healthcare ER or PE or whatever the case may be. I don't think it's that far off from me. I can write as I've been published in the American Heart Association and was a philosophy major. In residency, we had to critique research studies on a weekly basis. The MCAT was testing students on this as well just to get into med school. Most medical schools won't accept an applicant unless they did some form of research. A medical doctor knows the ins and outs of all aspects of medicine: nephrology, hepatology, neurology, surgery, psychiatry, rhemutology, etc. We had to learn every detail and work clinically in those fields before becoming a doctor. A PhD knows research very well but has to learn the whole pharma landscape which is no easy feat. I prescribed every damn competitor and I tell the patient when it will kick in and what the side effects are whether that was at 2pm or 2am. I get that PhD's know their research and no disrespect to them, other than that the slide tilts in the medical doctors favor. We socialize, we write daily notes, we summarize discharges, we consult other physicians, we "pitch" why this patient should go to the ICU or be transferred. We can "pitch" to the family whose overstressed, and to the sibling who is understressed to get certain points across in different ways. A PhD, mostly (not all), stay in their little lab rooms all day by themselves or a couple others. No disrespect but theres a level of pitching, writing, and the entirety of pharmaceuticals that PhD's may be behind in compared to a medical doctor. I see a ton of PhD's in the healthcare ER side, so I would think a medical doctor would be a 1 up.

I spoke to a PhD in the healthcare ER side and she was like don't assume we know everything you just said, we don't. Put all the sectors of pharma you understand in your resume. So now I have. I'm also constructing reports and learning financial modeling through Wall Street Prep.

The working without comp was suggested to me by about 3 people in the industry. I never pull a crazy move like unless its strongly mentioned by more than 1 person. You know what? The MD actually pushed hard for me to come onboard without comp and thanked me graciously for the offer. He said upper management wouldn't let him do it but he tried to convince them. You can call it desperate or you can call it committed. I had nothing to lose. If I was in an MD's shoes, thats the kind of dedication I would want to see. I understand theres an opportunity cost in training someone but I came from philosophy to medical school and came out fine all the while competing with people who took 5x the bio's that I did.

Lastly to answer your question. I finished med school 2 yrs ago. I feel young and can still pull the 80-100 hours a week I did in residency.

11/1/17

Sure. Seems like you have good reasons for wanting to make the switch. I hope it works out.

One thing I want to point out is that your analysis of the value-add between PhD's and MD's is missing something important. If you break out the healthcare field into its various subsectors, your run-of-the-mill healthcare or generalist ib analyst-to-buyside candidate can eventually get up to speed on almost all of the subsectors. It's not really that difficult. The business structures are straightforward and once a drug is proven, the modeling is doable especially once you add in GLG calls (the average doctor is going to be a pretty good barometer for what the field thinks of the drug) and calls with the sellside and company. The one subsector they can't do is biotech. The binary nature of the bets creates large opportunities for those who can do the due diligence. That's where the phd's come in and that's the value they add. I'm not saying that it'll be harder for you to get in as an md nor am I saying that you won't be effective in a FO role. Just pointing out the competitive advantage PhD's bring to the table. I think you point it out in your analysis but you're seeing it kind of wrong.

Again, hope you get in.

11/3/17

Level 1 is not "a joke". The pass rate is 43%, I know many, many highly intelligent individuals that do not pass on their first try.

11/3/17

We will have to agree to disagree. I truly believe that if anyone does not pass the Level 1 on their first try they are either not intelligent or they didn't put in enough work.

Obviously, intelligence and work ethic are relative so we can't get anywhere with this discussion but I truly do believe that if someone is smart/hard working enough to get into medical school they should be able to easily pass Level 1.

However, your perspective as a Certified User in AM is legitimate and should be taken into account.

10/28/17

This might just be a product of how I, specifically, broke in. But, having an interest specific to the sector was pretty important for me. Equity research itself is really just a set of tools by which you analyze your sector.

10/29/17

I found that networking was one of the most important things that allowed me to break in to the industry. For each job posting there are probably several hundred qualified people applying with great backgrounds, so having people in the industry who can vouch for you goes a very long way.

10/30/17

Networking? I really do inside people I know in finance which isn't many and of course hitting LinkedIn hard. In the 2 months I've been looking I had 1 interview and that was from connecting with someone random on LinkedIn. I have someone on the inside of a bigger bank who pushed my resume to the top where I got a call the next day but the call ended quick when the senior analyst learned I have no hard ER experience. What else am I missing?

10/30/17

You're not missing anything. Except MIFID 2 which will cut the # of analysts by 50%+. Simply bad timing, but that's the markets for you.

10/30/17

How do think this will affect smaller ER shops? Or er shops that cover mid to small-cap stocks?

Will the BB ER associate roles be wiped out (30%+ downsized)?

I have a feeling Asset Management is going to be as competitive as ever.

11/1/17

From what I've heard, domestically it won't be anywhere close to 50%+. BB's may trim down a bit but boutique/MM firms with little European exposure that have good analysts won't be affected

11/3/17

MIFID 2 will not cut the number of analysts in half in the near term. Maybe over like 5-7 years (and thats still probably a worst case scenario). No one even knows when the regulation will hit the US (though obviously many firms will adopt it before then). We'll know a lot more as 2018 progresses and buyside firms hash out their approach. It's definitely a headwind, but its not the apocalypse either.

11/3/17

Okay researchguy1234, we can agree to disagree and revisit in a year. Whether it's 30% or 50% doesn't really matter to me, but the sellside is ill-prepared for the upcoming buyside cuts for research. Many funds will reduce counterparties by 50%. Others won't, so that doesn't necessarily mean that headcount declines by the same %.

Most analysts not in a top 3 rank will be irrelevant and it's likely the bank itself will absorb ER costs (i.e. JPM), so you'll simply be an ancillary function to drive banking deals.

You graduated last year given your post history, so luckily as an associate you'll be fine compared to your bosses.

11/4/17

From my perspective, and you're right I've only been in the industry for 1.5 yrs, there appears to be ample demand for sell-side research (whether this is just due to the bundled nature I'm not sure). While large cap names are obviously over-covered, there is still a lot of value to be provided in SMID cap. Plus, the idea of "consensus estimates" would be pretty useless if only three analysts covered every name. I don't disagree with the fact that its a serious headwind, just don't think we're in for major cuts in year 1 of Europe incorporating the regulation. Will be interesting to see it play out nonetheless (assuming I still have my job in a year...).

11/4/17

If you don't mind me asking, what is your background?

Also, for someone who has graduated and has started working full time, where can you find ER associate openings?

11/10/17

Hi All,

I am in the process of doing points 2-3, however, had a query on the length/detail of the report.

I have read a couple of threads where people have gone in with initiating coverage where their reports were 20-30+ pages long. I don't imagine any of the analysts would read a report that long and I have spoken to an associate from within the firm I am applying for and he suggested just one page, however, a one page report would need to be relatively high level and basically a summary of the actual analysis i am doing.

I just wanted to know for people that had success, how long were your reports and how detailed were your valuation models?

For the vals, I was planning doing a DCF, with most my analysis around future earnings, as well as earnings multiple comparisons with it's top 5 competitors..

The approach i also planned on taking was once i apply (they only let you upload a CV/Resume), i was going to reach out to the senior analyst either through linkedin, or if i could find their email and basically say i am interested in the role, have done some coverage myself on a stock i am looking at and wanted to share some of my work with them, but cant work out an eloquent way of putting it without sounding slightly weird.

If anyone could provide advice on what has worked for them for the above, would be greatly appreciated!

11/20/17

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