AMA: I am an Equity Research Associate

Bio: tl;dr version: non-target, non-major, also had a sub average GPA in undergrad but compensated with a higher grad GPA and work experience.

I went to a non-target, east coast, liberal arts college and graduated with a biology major. Originally, I intended to pursue a career in medicine, so I found full-time work at a prestigious medical hospital in the NYC area, where I worked for some two years. After doing the "white-coat" gig and a few volunteer activities (e.g., working at a hospital in a clinical setting), I realized this is not what I wanted. At first, it was kind of alarming because I had spent the latter part of my life (6 years) focusing on best positioning myself to become a doctor, and now, here I was wanting to do something else, but I had no idea what!

Thus begun my long journey, involving lots of networking and relentless job search. I focused on my strong points - what was my background and my experience? It all spelled science/research/medicine, so I focused on selling those points. I quit my job as a researcher and then worked part-time at a CVS pharmacy (as a tech) until I landed something better. I took accounting/financial modeling books out of the library and bought the Breaking Into Wall St program to try giving myself an edge and show interviewers I was eager to learn. But no one bit, and people I had networked with said it would be a very, very long and uphill battle if I wanted to make it into a FO role at a bank, even with my background.

I guess I'll go into it later if asked, but I eventually landed a job at a pharmaceutical company, working within a business operations role (Pricing). Even though I knew it was not a finance role, I knew I had to bridge that gap of business background somehow. In addition, I managed to network into a MSF Part-time program in NYC. For an entire year, I worked my 9-5pm pharmaceutical job, while working on graduate school homework/projects, in addition to continuing to network/attend informational sessions.

About 3 months into it, I had finally landed an interview at a middle market bank for an Equity Research position, which I had failed to impress the Analyst, but it was a start! For lack of better words, it fueled my desire to push harder because I knew I was starting to receive some attention and people were starting to take me more seriously for such roles. More interviews started popping up: MM IBs (e.g., Oppenheimer, PJC, Jefferies), small boutiques, and elite boutiques (Evercore, HL, Moelis)...these were for either, investment banking analyst roles or equity research associate roles, all within the life sciences space - my bread and butter. After a year, I had two offers for equity research associate roles - ironically, both were at MM banks. I chose the one that I felt most connected with and had the best interview process with, not necessarily the one that granted me the most money.

Comments (79)

Jul 31, 2014

Are you doing healthcare equity research now? Could you talk about what you found to be some of the most effective networking methods to break into equity research?

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Jul 31, 2014

I am covering a life sciences sector, so yes. I ultimately knew I wanted to be within that space since I had a natural interest for it to begin with.

As far as networking methods, I would say:

-Looking on your alumni database and searching for keywords of careers that interest you and reach out (email/call) everyone on that list, not necessarily just high levels
-Reach out to friends/family/neighbors etc and express your interest in a casual conversation and maybe they may have leads
-Go to career fairs/networking events
-Cold email/call firms your interested in

I did all of that and more, including signing up for organizations that I necessarily wouldn't want to (because it cost money) just to give me any edge possible...

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Aug 5, 2014

Thank you very much!

Jul 31, 2014

What is your compensation? How does it compare to your previous jobs?

Jul 31, 2014

MuckDuck, I wouldn't ask anyone about compensation as a rule of thumb, as it comes off the wrong way. But, I make around $100-110K all-in.

My previous job was really poor compensation, around $40-45K

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Jul 31, 2014

Are you in NYC? Any advice for breaking into research? I am an intern in research at a MM bank right now but it just seems like hiring is on an as needed basis.

Jul 31, 2014
derpherpderp4760:

MuckDuck, I wouldn't ask anyone about compensation as a rule of thumb, as it comes off the wrong way. But, I make around $100-110K all-in.

My previous job was really poor compensation, around $40-45K

That's why he asked it on an anonymous message board.

Jul 31, 2014

I wouldn't ask in real-life but I figure it would be safe here :). I appreciate the advice either way.

How do you like the position so far? The work, the hours, is it what you thought it would be?

Jul 31, 2014

Congrats! How did you go about finding these jobs -- did you apply online or did the people you networked with tell you about openings?

Best Response
Jul 31, 2014

I found out about these jobs through networking. If you want to break into these FO roles, it's all about the hustle. Do you have what it takes? Do you really want it THAT bad? I know when I wake up every morning, I keep telling myself until the day I look in the mirror and say 'I am the sh*t' I will never ever give up wanting more and pursuing my passions and goals.

So in short, I had received most of my interviews via personal conversations (networking/some sort of inner connection) and then some via apply online. Ironically, I applied online for the job I had accepted. Also timing is a big thing to, and obviously, that is outside of one's own control.

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Jul 31, 2014

@derpherpderp4760 Same boat - I had 5 or 6 interviews, and ultimately accepted the one I applied for online.. Classic

Jul 31, 2014

That's timing for ya

Jul 31, 2014

Congratulations, were your interviews more technical or did they talk about your experience and knowledge in the industry?
Also, how do you compare to your peers within your bank? (Age, background, etc)

Jul 31, 2014

Now that you are in a FT role are there any mistakes you made while trying to land a position, or are there any things that you would have done differently while you were searching for a job?

Also what do you consider a sub par GPA?

Jul 31, 2014

@Stoo Who doesn't make mistakes? In fact, I think it's because of the mistakes that I learned how to improve myself and position myself better during the interview process and job search. In particular, it never hurts to go above and beyond to try to get the attention of the interviewer. I pro-actively created models and writing samples to send to interviewers, whereas before I didn't. So, when they asked me if I knew how to model and what experience I have doing it, I could show them my work.

Lower than 3.5 (I had a 3.18 in undergrad as a bio major) and then in grad school had a 3.7 (so that helped).

Jul 31, 2014

Could you provide some color on exiting to industry? Can you only go to companies you cover? Or are you able to exit into companies that are outside of the group you cover?

Jul 31, 2014

@summeranalyst93 I couldn't help you out there, as I just began. But from what I know, exiting to a HF or AM shop is not that uncommon. And yes, exiting to industry as well is an option, I am sure.

Jul 31, 2014

What are some things an intern could (and should) do to make the Associate's/Analyst's life easier?

You need to understand that a good firm, a profitable firm, and an attractive stock investment can be 3 unrelated things. -Epicurean Dealmaker

Jul 31, 2014

Congrats, and thanks for doing this! I'm interesting in hearing the details of your eventual interviewing success.
I understand you played off your health/medicine background, but I'm guessing you had to know at least a bit of equity analysis for the interview. How were the technical questions, and how did you prepare for them? (e.g. for the "pitch me a stock" question).

For analyzing healthcare stocks, what fundamentals do you dig into that are especially unique/important for that sector? Currently interning at a small VC doing due diligence on pharma/biotech companies and I'd appreciate your insight. Thanks

Aug 1, 2014

For most of the ib interviews, they were mainly cookie cutter: Walk me through a DCF, how would you value XYZ company, how do you connect the financial statements and how do you project/forecast, some brain teasers...

For ER interviews: I had the stock pitch question (sometimes) but mainly it was all fit. For the two interviews that produced offers for me, I had to build out a financial model with projections, derive a PT and valuation, and then also write a front page of a report for that company.

It's worth noting though that I did not have a finance background per se, so that was taken into consideration alot. So just to give you an example, I was not even asked a finance question at Evercore - it was all fit.

Aug 1, 2014

Oh, and I also for the interviews, had to do a timed writing sample in addition to updating models from a PR.

For preparing, I would advise using the WSO guides, BIWS (which I personally used), and Vault guide. Also speak to people in the industry, see what they look for/what's their perspective. For the pitching a stock question, pick a company outside of the sector for which you are interviewing for and just know as much about the company as you can...just know what happened for the past year (so 4 Qs and look for general trends, pay close attention to Q&A - that's where you can find where the street is usually interested in and see how they performed vs guidance and consensus during the quarters...I wouldn't worry too much about all the financial ratios; think big picture but if you can, it's nice to have a valuation of the company, using industry multiples from comps.

For analyzing healthcare, it's usually involves FDA approvals and/or European approval (if you're in medtech - it can be FDA approval or CE Mark approval). Those are the big catalysts, but also keep in mind you want catalysts that you can expect value (otherwise, it's not a catalyst) - so not every product approval will be a catalyst...Also, I would look for things that also drive value such as salesforce ramping, M&A, change in management, or large macro trends (procedural volumes decrease/related products associated with the company decrease in usage/etc)

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Jul 31, 2014

Hi,

How important was mastering financial modelling on excel in getting recruited? How deep should I learn modelling if im looking to break in.

thx

Aug 1, 2014

@eddie-k check out above comments.

Jul 31, 2014

Thanks for the AMA!

Your story is quite informative and inspirational. I'm curious: did you consider an MBA? Why did you decide to pursue an MFin over an MBA, which can open more doors?

Aug 1, 2014

I did consider an MBA, but ultimately, it came down to just having an MSF pop up at the right time. In retrospect, I don't think it was a bad decision since I knew I wanted to focus on finance.

MFin was 1 yr vs MBA is 2 yr and also 60K more.

Aug 1, 2014

If you've thought about it.... What are your LT goals or plans? Continue in ER and become an analyst or something else?

Aug 1, 2014

@WestCoast22 Well, not sure yet - but something like being Don Draper but at a bank seems awfully enticing...

Aug 1, 2014

Thanks for the AMA very informative, why did you decide to go to your bank over another? analyst/culture?

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Aug 1, 2014

I chose the bank I am currently with because I wanted to make sure of two things:

1) I would be happy with the analyst I was working for (since you spend such long hours there)
2) I would be able to learn from the analyst and enjoy the sector I was covering

Aug 1, 2014

Thanks for your insight. When you were prepping for your interviews, did you focus mostly on how to evaluate a certain industry or a broader knowledge on how to analyze any stocks?

Also, did you do a lot of networking or cold calling for coffees or potential leads? Or just kept applying for jobs in ER?

Aug 1, 2014

@moopad I think I answered that question above.

Aug 1, 2014

This is an awesome thread. Thanks for taking the time to field these questions.

One concern that I've been hearing more of is that ER is a dying field due to the changing landscapes within the finance industry. Do you have any insights as to whether this is really the case?

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Aug 1, 2014

@etwh10 I am not 100% sure, but the way I see it, buysiders want to see tons of perspectives on a stock because maybe out of all of those perspectives he/she can gain insight into the general consensus of the street and at the same time, find some value that others may not know about which could help with managing the portfolio. In essence, the researchers are making the market efficient. I think ER will be here for awhile.

Aug 1, 2014

Thank you so much for the insights! It's very helpful.

Aug 1, 2014

Was the MSF done at Simon?

Aug 2, 2014

@Anti Quixotic Nope, I attended a PA MSF program.

Aug 1, 2014

Hey man, as a fellow ER associate, thanks for doing a good job of painting a better picture of the space for students and prospective associates. Sounds like you're silo-ed into a Life Sciences vertical, how do you feel about having a specific concentration?

I've worked for two different analysts one that required the entire team to cover all 28 names in depth and the one I currently work for has me concentrated on two verticals. I find that gaining a broad understanding at the beginning gave me great context that I can leverage now that I focus on a specific set of our coverage.

Aug 2, 2014

@Determined Thanks, yeah I try my best. I don't necessarily thing I am pigeon holed per se into the life sciences space since the skill itself that you learn from research is translatable to other sectors, but yeah, the space is awesome. Lots of deal volume and I've always been a science guy, so it's exciting. And, I guess you have to remember the Life Sciences space is broken up into different coverage universes as well: Diagnostics, Biotech, Pharma, MedTech, Healthcare...it's a pretty large space, so lots of room to grow and create a diverse understanding of the entire market.

Aug 1, 2014

Thank you for doing the AMA! Your answers are quite informative and helped a lot.
I'd like to ask how do research associates/analysts advance to portfolio managers? Do people usually stay in the same fund to get promoted to PM, or they change to another fund? How long does it take? What's the criteria the fund considers when they are promoting a PM?
Thanks!

Aug 2, 2014

@tomxiong unfortunately, I cannot answer this question, as I have not made a transition such as that nor do I know anyone that has.

Aug 1, 2014

Congrats on your success.

Aug 2, 2014

How long have you been at this company?

Aug 2, 2014

How did you make the decision on BIWS vs WSP?

Aug 2, 2014

@Intlplayer Honestly, I just went with reviews from people I knew in real life and who have used BIWS. I wanted something simple, that could put it into laymen terms for me how to understand the accounting fundamentals and also help me develop my modeling skills. I can't really speak for WSP since I have never used it, but I presume it's just as good.

Aug 2, 2014

Congrats on the hard work paying off in your transition!

Aug 2, 2014

How much do you read each day?

also..

What is the best way to understand a company for the first time? [Some of my own thoughts: look through company website, read latest earnings transcript, read parts of the 10k like business description, industry primers]

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Aug 4, 2014

@Hunter23 For the job? A very good portion of my time is spent reading, which usually goes hand-in-hand with the writing aspect. I really couldn't put a number on it.

Sure, all of the above you mentioned are great, also I would consider reading more parts of the 10-k. The business description (or Business Overview) usually never yields the information to help you completely understand the company. Look at their risks, competition, research the competition, how do they make money?, when reading transcripts - filter the essential from the nonessential, get an idea of what the street's feeling is about the company, are there any headwinds/tailwinds?, etc.

Aug 4, 2014

Firstly, thanks for the AMA @derpherpderp4760 and congrats on breaking in.

I'm interested in both ER and health care--but I'm a Finance major. I'm beginning to get the impression that ER analysts who focus on the health care sector come from some sort of background in the field. In other words, how necessary is it to have experience (e.g. bio major > med school > MBA, etc.) to become an Equity Research analyst specializing in health care? Would an equity research shop hire a FT health care analyst straight out of undergrad that lacked a degree in the sciences?

Aug 4, 2014

@dipndunk I would say your best bets would be to network in. I think its definitely possible to work straight out of undergrad in the life sci space/healthcare space in ER, but it is a bit challenging. From my experience, usually the analysts look for individuals with life science backgrounds, so they know: 1) this guy is interested in it 2) they don't have to spoonfeed them biology terms (it's really just understanding jargon when you're reading science journals/studies/listening clients speak about their products) but you can pick that up too; I just think it's a bit more challenging then learning finance.

To give you an anecdote, I know some individuals that were placed into BB ER programs from undergrad in the biotech/spec pharma groups. But, that could be a combination of luck/networking prowess.

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Aug 4, 2014

You say you took financial modelling books out of the library. Can you elaborate on which books you found to be the most useful? What books/exercises would you find to be most useful for preparing for an equity research role?
Thanks

Aug 4, 2014

why the pay so shitty given u r in nyc? and how old r u

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Aug 4, 2014

What restrictions for stock ownership does your company or the industry have in place? Can you own stock?

Aug 6, 2014

This is great. Thanks again for the AMA.

My question is on the networking - I know you made a really good point about the hustle and trying to network as much s you can.. if the analyst ignores you, do you keep trying the same ones again and again?

Also, were you able to get any reserach reports from the analyst you were interviewing with beforehand?

Aug 6, 2014
derpherpderp4760:

non-major

How did you graduate without a major?

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Aug 6, 2014

Dude didn't you graduate without a major too.....

Aug 6, 2014

still undergrad, thanks for the chirp though!

Aug 6, 2014

I graduated with a major - it was a non-target major. Apologize for the typo.

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Aug 6, 2014

.

"Now go get your f'n shinebox!"

Aug 6, 2014

Non-business major?

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Aug 13, 2014

how valuable was your experience in pharma pricing? Would you ever go back to working in industry vs finance?

Aug 22, 2014

@couchy I think my pricing experience was so-so. The most valuable skills I gained from it was learning how the business worked and how to get really proficient with excel, since most of my day at the pharma involved using excel. I would consider going back to industry, when I start getting tired of the hours, but I prefer the hustle right now...I'm still fairly young and am hungry for more.

Aug 31, 2014

@derpherpderp4760 thanks for your informative post! What are you longer term goals after your current position? You mentioned that you did an MSF - do you recommend that route for those who want a career change into ER?

Aug 18, 2014

awesome post and insight. thanks

Sep 1, 2014

@derpherpderp4760 Congrats on the job! If you don't mind me asking, how quickly did you start covering 10 companies? I would guess it might be somewhat overwhelming with the series exams, and was just wondering if the other associates in your team helped you with the transition or how you transitioned into covering all 10 companies?

Jan 8, 2015

Sorry for the delayed response, I actually had worked out with my analyst a timeframe when we were "cooling" down, so that I could focus on studying. It is kindve a drag to complete, but it has to be done. Covering 10 companies is manageable right now but analysts always want to ramp, so expect to cover more. The other research associates are focused on their own sectors, but sure, if you ask them a general problem or for some insight, at least my co-workers, they tend to be rather responsive.

Sep 1, 2014

@"derpherpderp4760" How valuable in your opinion was the science background? I am trying to picture a parallel situation, ie finance undergrad background, CFA, etc + self-taught specialized industry knowledge (for example geology?).

Sep 3, 2014

@"sdeni88" The science background essentially validated that I was interested in the field. As for the value it brings to the work place? I'd say it depends. Are you covering spec. pharma? biotech? medtech? diagnostics? managed care?

I'd say the industry knowledge comes with the experience you acquire from working within ER, unless you're a seasoned professional that's in like FP&A within the industry of question that you will be covering for your ER gig.

In terms of your situation, I would advise to learn the industry your interested in but by learning the companies that you can see yourself covering and what the industry is currently doing, rather than trying to learn the fundamentals of geology.

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Sep 8, 2014

I'm in a similar predicament as far as having a tough time breaking in. Graduated in 2010 with a 2.97 GPA, accounting degree from a small private school. Worked for a publisher in corp finance and now work for a major news outlet in finance. Passed level 1 CFA and can't get an interview in equity research. I'm not surprised by this, just very frustrated. I've tried the networking thing on LinkedIn, cold emailed people - nothing.

Any other ideas I haven't thought of?

Thanks

Sep 23, 2014

@antd1214

Well, I think you're GPA doesn't help, as some firms automatically put you in a bin based upon that number. Therefore, I would encourage you to perhaps looking into graduate school (MSF/MBA). Try networking with your alum from your undergraduate school - small private schools tend to have a well-connected, helpful network.

I think you could spin your publishing background in some sort of role in equity research after grad school, since it will give you a fresh start if you get all your eggs aligned.

Cheers.

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Sep 29, 2014
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Oct 24, 2014