Ask a VP in Equity Research anything

I haven't seen one of these in a while, so I figured I would start one. I am a Vice President in equity research, with coverage of a selection of stocks (from mid to
small cap firms) within a large sector. I'm at a top 10 bank.

Ask me about how the industry works, lifestyle, recruiting, compensation, etc.

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Comments (108)

Best Response
Feb 19, 2016

first, thanks for doing this AMA.

second, I'm inclined to take people at face value, but your misspellings make me think you may be misrepresenting yourself, please do yourself a favor and become a Certified User (@AndyLouis can help you here). I only say this because we often times have 17-19 year olds on here acting as if they're sage kelly day in and day out, giving advice to other 17-19 year olds, and it doesn't make the forum any better. having someone with your experience is great, just need to make sure it's legit.

couple questions:
-what industry?
-how'd you get your start?
-aside from updates from companies you cover and the basics (bloomberg, factset, reuters, etc.), what are your news sources?

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Feb 19, 2016

thanks bro, pm'd him/her about certification

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Feb 22, 2016

I feel like you're throwing shade at me so I will answer why I'm not Certified User. I don't intend on staying here much longer (probably about a week or two) so really doesn't matter to me. Secondly, I don't intend on meeting or knowing who any of you guys are so I'd prefer not to share my linkedin to Andylouis or whoever because really it doesn't matter. I thought I'd give back to the younger users and I did so now I'm just about done with this forum. Also, how the hell does someone fake being Dick Fuld for years and get certified on here? That is the most sage kelly-esque troll job ever and the people in charge only fed the crap he spewed. People actually believed he was him because of the "credibility" of Certified Users.

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Jul 4, 2016
1234bama:

I don't intend on meeting or knowing who any of you guys are so I'd prefer not to share my linkedin to Andylouis or whoever

*whomever

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Jul 2, 2016

Sorry for typos - on a phone
1) won't disclose industry
2) did investment banking for a couple of years. wanted to do something public market oriented (was looking at ECM, hedge funds, mutual funds) and surprisingly ended up in research
3) news sources include industry tailored publications

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Feb 22, 2016

Thanks for doing the AMA.

Can you provide any insight for recruiting during/post-MBA?

Feb 19, 2016

Hi Fanalyst, thanks for the AMA. Do you have any comments on Goldman Sachs GIR? I will be joining GS GIR as an Analyst Research Training analyst in Singapore and I have the opportunity to interview for different sector teams. I will appreciate any information about GS GIR's industry reputation, respectable analyst, and strong teams. Thanks!

Jul 2, 2016

I don't want to get too much into specific firms or teams, but Goldman Sachs invests a lot into their research department and provides a good opprunity for junior people. The department doesn't rank highly in Institutional Investor, but the department does do well with important clients. Goldman in general is a good place for junior people to learn - hours and culture will vary by team (as with any department)

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Feb 20, 2016

@Fanalyst - How does the Equity Research compensation compare to Investment Banking? What kind of base salary and bonus % can a post-MBA Equity Research Associate expect to get on the West Coast? How many hours per week do you work typically? What are some typical exit opportunities for ER Associates and VPs?

Jul 2, 2016

Research compensation is lower than Banking. MBA associates probably make 125k-130k base and a 30-40k bonus the first year. Bonuses don't necessarily double the next year. The next bump likely comes if/when you make VP.

Hours are about 60 a week. Higher during earnings season. So the hours are better than banking.

Exit opportunities is where research shines - ranges from mutual funds, hedge funds, companies, investment banking (syndicate, ECM), sales, etc. I've seen it all. Any job that requires knowledge of financial statements and the ability to write is fair game.

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Feb 19, 2016

thanks for doing the ama, will frontpage now and again later this week

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Feb 22, 2016

What the best advice for a non-finance individual who wants to switch into ER. Is it better to gain experience in the industry they want to cover, then CFA and MBA or what would you like to see?

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Jul 2, 2016

MBA is probably the best bet in terms of switching into ER. Generally, hiring managers and teams want to see some interest in stock picking and some ability to describe investment ideas in writing. Industry knowledge is helpful (particularly in health care), but not necessarily essential. Most people who get into ER come from some other kind of finance.

Feb 22, 2016

Thank you for doing this, I am interested in making the jump into ER myself.

Couple of questions:
- I'm at a big four accountancy firm studying towards an accounting qualification (ACA/ACCA/CPA) as well as CFA. What else could I do to improve my profile? (for example, do you think writing my own research on sites like seekingalpha.com could be beneficial or can backfire too easily?).
- From my understanding teams are relatively small and turnover of employees is very low. Do you have any advice about how to approach networking for ER specifically? (anything different from the standard cold-emailing and asking to meet for coffee?)
- Are you worried about the future of ER as a business?
- I hear that ER really differs from bank to bank, with some banks treating it like a real revenue generator and others as a cost center. I also hear that it is very important to work under a good analyst. How easy is it to jump from sector to sector or bank to bank, in case you end up in a detrimental spot?
- What do you look for when interviewing a candidate?

Thanks again.

Jul 2, 2016

1) I have never seen prospective candidates write on Seeking Alpha - I'd imagine it could be a detriment. I would try to show interest in equity investing in an organized way - maybe keep a personal model portfolio, have a written stock pitch, etc. I have seen accountants move over to equity research through networking and demonstrated knowledge of / interest in markets.

2) Teams are small, but turnover isn't necessarily low. I would try to network with anyone in an equities division of an investment bank (sales, trading, research). Those people can pass your resume along to hiring officials within research. Those individuals can interview you and make sure you are top of mind for open positions.

3) I am not necessarily worried about the future of ER as a business because it is one of the few parts of the bank that is basically required by regulation - if you want to be an investment bank that underwrites equity, you have to have equity research. As much as clients say they don't value research, they spend lots of time on the phone with analysts, read reports, consume corporate access, and otherwise use analyst's time. As commission revenues shrink, research budgets may come under pressure, which could lead to pay cuts and such, but the departments themselves will always be there.

4) You are correct - some banks do invest heavily in research, some try to spend as little on it as possible. If you department likes you, it can be easy to move from team to team - but this generally happens only due to a triggering event (an analyst leaves, a junior spot with more upside opens up, etc).

5) I look for candidates that:
- Write well
- Can be personable in front of clients
- Can articulate an investment view without being too "pushy"
- Can show a desire to get deep into financial statement or industry data to answer a question
- Understand the role is not just picking stocks and generating alpha, but actually managing a lot of different audiences

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Feb 22, 2016

At what level does equity research turn into a sales gig? If you're more interested in being a research nerd, at what level should you switch over to the buy side?

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Jul 2, 2016

Equity Research Analysts are constantly selling. At the more junior level, you are selling your knowledge of the stocks and industry to internal constituents (sales people, traders, certain clients). As you get more senior, you will be on the phone with clients more and more. As you cover stocks, you will be doing in person meetings with clients. A senior analyst may spend 50 to 100 nights on the road "marketing," which means going to clients Boston / Philadelphia / Baltimore / Chicago / Atlanta / Miami / Dallas / Austin / Kansas City / Los Angeles / San Francisco / Europe / Asia / and of course New York and discussing your stock calls and view of the industry. It is possible to be a "research nerd" in the first few years of a job, but in order to have a career in equity research, you have to be comfortable meeting clients. Note that this is not necessarily the same as being a genius stock picker.

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Feb 22, 2016

1) What would you say to someone who is torn between IB and ER? I feel like both industries have their distinct pro's and con's.
2) Any opinions on fixed income research? Is the job market more or less competitive? Is it difficult to move over from fixed income to equities?
3) Is the CFA designation mandatory if you want to break in or move up the ladder?

Next stop: Flavortown!

Jul 2, 2016

1) I feel that investment banking is the best place to learn how to model companies, read financial statements, etc. In research I apply that knowledge in a very specific way. However, investment banking has more of a training infrastructure at most banks that may give you a better technical skill set in terms of basic excel, accounting, financial theory, etc. The lifestyle both in the short and long run is more difficult that research, but the pay is higher. Equity research is obviously more centered on public equity markets, while investment banking (on the industry side at least) is more a combo of M&A, debt and equity. In the long run, however, equity research can be very fun as a senior analyst if you like to travel, meet investing clients, come up with ideas, generate discussion with your work, etc. As a junior employee in my late 20s, I was talking business trends over drinks with CFOs and CEOs in my space - I can reach out to CFOs and CEOs pretty regularly right now. You may not really get access to those types of officials in an investment banking role until you are much more senior.

2) I know more about credit research than other types of fixed income research (macro, rates, commodities, etc). Credit research and equity research are very similar. It is somewhat common to move from equity research to credit.

3) Depends on the bank. Most banks encourage it, and most research directors / hiring executives look kindly upon it. But almost no banks I know require a CFA to be hired or to move up.

Feb 22, 2016

What is the best answer you would like to hear for "why sell-side". It is a hard question for me considering my long-term goal of being on the buy-side.

Jul 2, 2016

It is very common for equity research juniors to move to the sell side. Most people who are hiring junior staff (generally called "associates" no matter what the corporate title is) understand that some will go the buy side. Research departments don't frown upon this over the long run as it is good to have former sell side analysts working at the clients. That said, when it comes to "why sell-side," I would say focus on your desire to want to add value to the client. My favorite part of the job is talking with clients about their investment theses and helping them out any way I can (on the phone, with written research, providing data, providing management access). Coming into an interview and saying you love the idea of generating alpha or something like that pegs you as someone who wants to transition over to the buyside (which isn't really a bad thing at all - but some hiring mangaers won't like that).

Feb 22, 2016

I find the job very interesting, but English is my second language.

1- How important grammar and writing is in ER? Is being a non-native English speaker acceptable?
2- What advice do you have for a guy like me?

Thanks for doing this!

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Feb 22, 2016

You have to be at least better than average in writing.

Feb 22, 2016

It seems that every other question got an answer from OP except mine. I think that your posting a reply to my post made him miss my questions...

Feb 22, 2016

How hard is lateraling into ER? I work in buy-side analytics and would like to switch to SS ER, but I've been warned that tenure is long for junior employees and that the field is far smaller than say, investment banking.

Would you have any specific advice on networking with individuals in Equity Research or starting at a junior level?

Thanks for your help.

Jul 2, 2016

You can lateral into equity research as positions open up (from essentially now through the summer). Tenure can be long for junior employees, but many move to the buy side, companies, to business school, other financial jobs, etc, so there is a decent amount of turnover. The field is smaller than banking, but there is definitely a way to break it. Like I mentioned to another responder, the best way is to network with friends or contacts that work anywhere in equities (research, sales and trading) and go from there.

Feb 22, 2016

What is the comp like at the vp level?

Jul 2, 2016

It depends on what kind of VP. If you are a strong "senior associate" on a team, it can range from $200k to $300k. If you cover some stocks, it could be $200k to $400k. If you are a VP with senior coverage of an important sector (a lot of newly promoted "analysts" fit this description), it cold range from $250k to $500k. At the VP level, it is a pay for performance game - performance being measured by broker votes, feedback from important clients, feedback from covered companies, II votes, etc

Mar 3, 2016

VP w/coverage can easily get to $500k-$1mn

Jul 19, 2018

in what is this likely?

Feb 22, 2016
  1. Can you talk a bit about the modeling work you or your associates do... how rigorous are sellside research models compared to the modeling work you did in IBD?
  2. What is your response to the criticisms from the buyside that most research and analysts are not very good? Do you acknowledge this and try to differentiate yourself from other coverage of a particular company?

Thank you

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Feb 22, 2016

Is there a difference between research approaches, techniques or methods used by different banks? cannot find a good answer for "why equity research in our bank" question.

Jul 2, 2016

Research approaches, techniques are methods are highly specific by individual teams and senior analysts. Some firms do have a research methodology that they try to enforce, but it they tend to be very general or loosely enforced.

Feb 22, 2016

Thanks for doing the AMA. You said that you switched over from banking, (i) how many years of IB do you think are likely helpful before making the transition, and (ii) did you have to take a step back in level when transitioning.

Feb 22, 2016

@Fanalyst Is ER pretty much only in NYC?

Feb 23, 2016

Hi, I'm entering a FT BB ER job after graduation, and I'm wondering if you have any advice on picking a sector?
Should I pick a sector I am more interested in/has higher future growth, or try to work for best the senior analyst? I know this isn't a black and white answer, but if you can recommend major considerations to consider that'd be great. Long term I'm open to both SS and BS, but kind of have a nagging dream to do a startup too.
Thanks.

Feb 23, 2016

If transferring from industry to either MBA or direct to ER (most likely MBA first), what would you want to see knowledge in / how would I provide value?

...

Feb 23, 2016

I have 4 years experience at a European global corporate and investment bank (in NYC) working as a credit analyst (also have obtained my CFA designation). How easily could someone with my background transition into sell side research?

Buy fear, sell cheer

Feb 23, 2016

What does compensation look like at a BB in NYC for an undergraduate right out of school?

Feb 23, 2016

Thanks for doing this, these are very helpful.

I've got a few questions more oriented towards career progression. I'm in my second year as a research associate so curious about a few things:

1) First off, just curious as to why you never made the jump to the buy-side?
2) How long have you been in your current position and how long did it take you to get any coverage? You mention doing IB for a little bit before coming to SS research so wondering what your progression has been.
3) I've heard that if you want to stay more research-oriented you should jump to the buy-side instead of taking on coverage since you really have to start balancing the technical/research with the sales/marketing at that point. What has been your experience with this and is it even that accurate a statement?

Thanks again for taking time to give guidance and help us become successful in our efforts.

Feb 23, 2016

Thanks for doing this Fanalyst!

I had a couple questions about Ph.D.s looking to move in to biotech ER:

1) What sort of qualifications are sought in Biochemistry/Biotech Ph.D. candidates to get in to ER? Specifically, is a CFA level 1 required?

2) How does consulting experience (not related to biotech or target ER field) look when transitioning in to ER?

Feb 23, 2016

Can we meet up for a happy hour or a coffee on weekends ?

Feb 23, 2016

I've heard that the "brand name" of the firm is not as important in Equity Researchas in other areas like IB - at least when you're looking for exit opportunities down the road. Is this true? Or will some lesser known Equity research firms be looked at as inferior? I also heard that in many cases the smaller and lesser known Equity Research firms produce some very knowledgeable analysts given the larger the responsibility they have at the firm.

Jul 2, 2016

It depends on what audience you are referring to. The "brand name" of the firm is very important when it comes to actually paying firms. Clients are increasingly paying more and more of their commission wallet to fewer and fewer firms, so the bigger firms may be at an advantage going forward. Also larger banks tend to get more access to equity offerings, which are good to be involved with on the research side (you learn a lot about earlier stage companies, clients value access to offerings, etc). Brand name firms can also generally pay more.

However, if you are talking purely about what analysts are viewed as quality, you may be right. Many smaller firms have top analysts. If a client finds that analysts work useful, they will find a way to use it. Also, if an individual junior analyst is well liked by a client, that junior may eventually be recommended for buyside jobs when thy open up on the buyside

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Jul 2, 2016

To all - I've been very busy this week, so it has been hard to answer questions real time - I will try to get to everyone over the next few days

Feb 25, 2016

How come you never left to the buyside? In particular to hedge funds? Besides the higher compensation, don't you find it more interesting to be able to come up with your own investment thesis and actually implement it?

Feb 25, 2016

how do you develop industry or company insights? i know ER guys follow an industry, but I'm just curious to know how you can begin doing that earlier in your career. any advice would be helpful. thanks.

Jul 2, 2016

There have been a few "Why did you stay on the sell side? Why not go to a hedge fund?" questions, so I figured I would address them all here. I periodically am approached by headhunters for hedge fund jobs, but never really sought them out in any meaningful way(I did seek them out after banking). Here are a few reasons

1) Most hedge fund jobs I have seen were for junior analysts to work for a senior analyst or PM - by the time I was being approached, it seemed like a step down in seniority

2) I saw pathways at my current bank to gain more seniority, responsibility and comp, so I was never in a hurry to leave

3) I genuinely like client interaction - obviously there is less of that in a buyside role. I like debating scenarios with a wide variety of clients. I also like traveling to meet companies and clients, marketing meetings, etc. I enjoy many aspects of the job.

4) I am sensitive to quality of firm - there aren't a ton of hedge funds I would really be gung ho about working for

5) Hedge funds, mutual funds are always options down the road. So are other corporate jobs.

Most of these answers boil down to personal preference. I enjoy the job, the bank has sought to give me more responsibility and pay, and I don't necessarily think the grass is greener (for me).

One thing to note for you guys is the fact that I have worked for so long on the sell side may actually make me less attractive to some buyside firms at this point, especially those that want more junior talent, so if you want to go to the buyside, it's best to jump after one or two years.

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Feb 25, 2016

What tools do you use and what do you in particular use them for? Bloomberg, Factset, CapIQ, Reueters or smaller guys like Ycharts, WhaleWisdom, EdgarPro, Alphasense etc...

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Feb 25, 2016

How do you find working with Equity Salespeople? That's probably an important component to share with individuals interested in this job so would like to hear your thoughts.

In my experience, aside from a few they were mostly worthless individuals, failed financial advisor types that had little talent.

Jul 2, 2016

As annoying and worthless as some salespeople may seem, they tend to be organized, persistent in getting in front of clients and tend to have clients eyes and ears. Remember that clients are inundated with hundreds, if not thousands of equity research reports a day from dozens of firms. Clients often trust the best salespeople to screen out the most relevant research for them. Salespeople also make sure clients get access to corporate access, IPOs and other equity offerings, prime brokerage, liquidity products from the desk, etc. As an equity analyst I may know more about how to model a company or more about finance, but the salesperson may know the clients' needs and strategies more. I used to dismiss the need to get to know salespeople, but salespeople can be the biggest advocate for your career in research. It is critical to be well regarded by the salesforce as an analyst.

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Feb 25, 2016

How often do you see people move from IB to ER?
Do associates generate any original ideas themselves or are they just building/updating models and revising reports and their analyst's writing?

Feb 25, 2016

Thanks for doing this; could questions:
1) What are the common exits from ER as you progress to VP and beyond? I know IR is common but is it possible to get finance/strategy or even COO/CFO gigs?

2) What does comp look like at and past the VP level? Do you see this shrinking in the future?

Feb 26, 2016

How do you view a candidate with less relevant finance experience (corporate finance or Sales and Trading) but a Master of Finance and CFA Level I and II?

Feb 26, 2016

Thanks for doing this.

I'm curious what you think about the future of research is as it relates to technology. A piece just ran in the Times that discusses how AI and automation could eventually make analysts obsolete for the most part. Do you see much truth in this in five, ten years? What skills do you think that someone breaking into the field now should look to possess that may not have been relevant/have existed a few years ago?

Jul 2, 2016

There is endless pressure on what is called "high touch equities" - research, sales, and cash trading. However, certain large clients (long only clients, equity long-short hedge funds, etc) will always value these services. They want to call an analyst to hold their hand on an issue, they want qualitative perspective on industry sentiment, and most important they want analysts that are respected by management so they can have access to this management. Equity research isn't a glamorous as it was in the mid to late 1990s but it will always be around. The question is how well will analysts be compensated. The industry has continually struggled with the issue - investing clients and issuing companies both want to have intelligent and competent research analysts, but it is difficult to pay them well along with all of the other people that need to get paid (investment bankers, salespeople, traders, etc). This goes in cycles. We've all heard of various parts of the investment bank facing pay pressures this year. Anecdotally, Equity Research Analysts are facing less incremental pressure on compensation. Of course, compensation per employee was lower anyway, but firms continue to see the value in having and staffing equity research departments.

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  • Anonymous Monkey
  •  Feb 26, 2016

What advice would you give to someone trying to break in the industry who may lack the experience?

Feb 26, 2016

Hey thanks a lot for doing this. I just went through recruiting for a SA position for ER, got a lot of contacts but unfortunately didn't get an offer. Few questions:

Working at one of the Big 4 this summer in a Valuation Services role, do you think the experience in a valuation role could be leveraged for full time recruiting?
For FT recruiting is it good to have an idea regarding which specific coverage team you want to join?
Also when reaching out to ER professionals is it better to reach out to lead analysts or the associates who work under him/her on the coverage team?

Thanks!

Feb 26, 2016

More of a research question: Why is the equity put/call ratio greater than 1 and why is the ETF/ETN ratio less than 1? I assume it's because there's inverse funds but I'd like further exploration, especially because of the adverse market conditions.

Feb 26, 2016

Hi AMA, thanks for doing this. Very informative thus far. I have a couple of questions as well:
1. When you say top analysts need to start doing more client meetings as they initiate coverage on sectors, etc.; do you mean clients from buy side (whom you'd try to sell an idea to in order to generate commissions for your firm) or do you mean clients in regards to the companies you're covering (as in interact with these companies to initiate coverage)?
2. I think one of the posters above asked about the role/tasks of a new associate (assuming associates in ER still refer to post-MBA associates such as in IBD). What do you think the major roles/responsibilities are for these associates joining ER after MBA.
3. Is interaction between S&T the main one you'd typically have in ER (in regards to selling to or pitching idea for institutional investors)? Or would you also get to interact with IMD or Asset Management divisions (such as in GS, MS, BOA, etc) for individual but HNW or UHNW accounts/advisors?
4. I am pursuing a part time MBA currently from one of the top business schools (think Kellogg/Booth) and am hoping to do a summer internship in ER next summer (2017). My school allows for OCR in full time spots but not in part time programs so OCR applying looks to be a bit of a long shot. I work in financial services as well but more in modelling/risk/analytics type roles. How would you recommend for me with a few leveragable skills (though not many) and some synergies from MBA, to go about recruiting for post-MBA associate roles as most recruiting (from what I've heard) happens through summer associate pools.
5. In terms of exit opportunities, do you think that ER would ever be at a disadvantage to IB in these. Assume that one wants to go into a corporate field, financial strategy, business development, FP&A strategy type roles and not into hedge funds/PR/buy-side. Do you think any of the roles in DCM/ECM/M&A/ER/S&T/etc (I can already tell S&T isn't really applicable but added for reasonableness) prepare you better or worse for that type of a gig in the future?

Thanks again for the thread and information you've shared thus far!

    • 1
Jul 2, 2016

1) When I talk about "clients," I am talking about buyside investing clients - research analysts and portfolio managers at hedge funds and mutual funds. As sell side analysts, we meet with the companies we cover all the time - informal meetings, trips to corporate headquarters, conferences, etc. Of course, these companies may also be clients of the investment bank (M&A, equity and debt offerings, etc), our job as research analysts isn't to serve them as clients.

2) The responsibilities are very similar to analysts - modeling, writing research reports, etc. As a post MBA associate you will generally be given more responsibility quickly - for example, you may be sent alone to accompany a management team on a non-deal roadshow, you may be sent to industry events, etc. Also, post-MBA associates are typically given more client exposure earlier.

3) We interact more with S&T. But sometimes we also interact with the HNW salespeople who cover certain accounts. As far as the asset managament divisions, we actually advise other banks' Asset Management divisions as opposed to ours. For example, Goldman Sachs equity research often do meetings with JP Morgan Asset Management. Typically, the asset management departments of banks (the ones that run mutual funds) simply behave as another long-only mutual fund.

4) The key is to simply network at equity research departments at on campus events and to try to get recruited outside of he formal OCR process.

5) IMO, IB is generally the strongest as terms as exit offerings, but ER is actually very close behind and better than most other parts of investment banks (for example all of Sales and Trading, DCM/ECM, etc). I know former Equity Research Analysts who are CEOs, CFOs, etc. Typically, ex research analysts enter corporate treasury, strategy, finance and investor relations functions. From then on, it is simply about moving up through the company.

    • 2
Feb 26, 2016

Thanks Fanalyst, appreciate the feedback.

I'm keen to understand your reasons/experiences in terms of these exits into corporate strategy positions from ER. I imagine when you say IB has the strongest exit offerings, you're referring to M&A rather than any other advisories out there. Please confirm/clarify if I got that wrong.
What skills do you think are particularly leveragable from ER which one doesn't necessarily get from DCM/ECM/S&T. Of course modelling and understanding of financial statements (perhaps being solely responsible for these financial models on corporates versus split up work in case of other advisory groups?), understanding of capital structures for firms, etc. are marketable skills, but how/why/what do you think are the key value-adds from ER experience which makes one a good candidate to go into corporate finance strategy/CFO offices/etc roles?

Is it due to the "networking" which you talked about with the management teams and CEO/CFO on non-deal roadshows, etc or is it another tangible skillset one gains.

Cheers!

Jul 2, 2016

I think the point is that in S&T, there is almost no financial modeling. These professionals may generally know about multiples and such but very few can build a model, apply a wide variety of valuation methodologies, etc. In ER, you learn how to do that.

Feb 26, 2016

Thanks so much for doing this AMA. I am an MD (medical doctor, not managing director) with about 15 years of clinical oncology experience. I got my MBA from a top school a couple of years ago. I am doing an online course in Excel and financial modeling to bolster my finance skills. I am interested in a sell-side ER position. Would a bulge bracket be interested in me as an older candidate? What base salary and bonus should I expect at BB vs. boutique? With a preference for biotech as an industry focus, are there many opportunities in San Francisco or would NYC be a better bet? Thank you!

Feb 26, 2016

Thanks for doing this mate. Have you seen any transitions from BB operations to ER? What would you advise someone who is in BB ops and wants to move over to ER?

Jul 2, 2016

I've seen it - it's simply about networking. Meet some people in equities, demonstrate knowledge about the stock market, have some stock pitches ready, etc.

Feb 26, 2016

Is it possible for engineer who is almost done with his masters to move into EQ post graduation or is a mba required?

Jun 4, 2016

.

Feb 28, 2016

During undergrad, I interned for an Asset Management firm in the equity research team and absolutely loved it. Once I graduated, I moved to Europe and did grad school for a masters in finance. I have about five years work experience in FP&A (financial planning & analysis) at a corporate. What do I need to do to get back into equity research? Do I need to start at the bottom and work myself up?

    • 1
Feb 28, 2016

I'm about to start FT at a MM bank in equity research after I graduate (undergrad) and have a couple questions.

  1. What advice do you have on making the best impression possible and getting off to a strong start?
  2. I would like to end up in research on the buyside at a well respected firm. Do you think I should try to lateral to a BB after two years and spend some time there to maximize my chances of landing a good buyside gig? The firm I'm at is well respected but still doesn't have the brand name that a BB would.
  3. Lastly, I'm not sure if this was discussed already, but are you working towards your CFA? If so, did you find it hard to balance getting your licenses and the CFA while working full time in research?

Thank you!

Jul 2, 2016
  1. Spend a lot of time learning all of the models for each of the companies you cover. Read 10Ks and Qs diligently. Take copious amount of notes. Where you can, suggest ways to make processes faster and more fail proof.
  2. I've seen people lateral from mid market firms to the buy side as well. Lateralling to a big bank could help, but the key to going to the buy side is doing work that clients recognize as quality and also getting client interaction. In addition, being recognized as a smart person by the sales force is also key as sales teams are often asked by buy side firms for recommendations for smart juniors.
  3. I am not currently working towards my CFA, but I am keeping the option open. The CFA is generally recommended, but it requires a lot of organization and frankly the sacrifice of a social life for a couple of years.
  • Anonymous Monkey
  •  Feb 29, 2016

Sir, I have a question related to my own career.
I have a master in global economy and financial management, and a bachlor in Korean Language (I am Chinese).
Fluent in Korean, English, Chinese and just started a job in a Chinese commercial bank, Corporate banking dept, Seoul branch for about two months. Corporate banking is really different from what I learned at school. At school, I learned about valuation, investment, but here I am mainly doing trade finance. In general, I like this job, and I am learning everyday. I am just wondering what options do I have after this job. After corporate banking, is it possible to transfer to PE or anything related to investment? If possible, how can I prepare for it? If not possible, what other options do I have? Thank you very much.

Feb 29, 2016

Hello Fanalyst,
thank you for your insights I have few questions.

  1. Have you ever had some ethical issues like for example, you believed company A wasn't valued as much as WAS your target price because of a certain model, you are using in your bank or due to order from senior management to set a target price?
  2. My 2nd question is regarding how can someone who cannot get any job in financial industry or doesn't have money to pursue CFA and MBA, learn equity research himself (like valuation methods, industry and company research, etc.), which might he later use for trading his own portfolio.

Best regards

Jul 2, 2016
  1. Equity Research is rife with conflicts and such as an industry, but it is never as transparent as senior management demanding a price target. Look at the recent case of Charles Grom at Deutsche Bank for a recent example of an issue arising.
  2. You can always read corporate finance text books. Brealey Myers is a good place to start.
    • 1
Feb 29, 2016

I will be interning at a BB this summer in NY with the ER division. Advice for turning this into a full time offer? Any idea (% wise) how many summer interns actually get FT offers? Thanks for taking the time to answer.

Jul 2, 2016

It generally ranges in the 75% territory. This advice applies to anyone interning in any finance field, but show an eagerness to learn, pay attention to detail, be proactive when it comes to asking questions or asking more work, make sure you do things like attend the morning meeting every day, network effectively, etc.

Mar 1, 2016

Do you have any advice for a Masters in Accounting student who wants to work as an ER analyst? Getting an MBA right now is not an option as I have no white collar work experience. My plan is to work in audit for a few years and then transition to ER, although I'm unsure of how to plan and accomplish this.

Mar 2, 2016

Know anyone hiring? Background in IB (current) and Asset Management. Wanting to get into ER or back into asset management.

Mar 3, 2016

Hi all,
thank you for your post.
I'd ask if it is possible do the switch from PE (1 year analyst) to equity research and how it seen this change.
It is common?
Regards
Alessio

Jul 2, 2016

It is not common, but it is definitely possible. ER firms will hire from a wide variety of finance areas (sales, trading, banking, private equity, certain back office, etc)

Mar 3, 2016

Thanks for your reply.
But i have better change of getting equity research from:
- a back office role (settlement) in a good european bank (BNP parias)
- an analyst role in private equity in a small shop
Thanks again

Mar 9, 2016

analyst role in PE

Mar 3, 2016

My question is about fit...

I've noticed that personalities tend to differ from industry to industry. The food and beverages group is nice and super chill...while the TMT group is full of cut-throat psycho, etc.

Have you noticed this? And if so, can you give me an idea of what to expect from different groups? O&G/A&D/retail/utilities? I am looking to switch to a different industry group because I don't really like the group I am with, but I don't want to leave it for something I am going to hate even more.

Cheers

Things may come to those who wait, but only the things left by those who hustle.

Jul 2, 2016

The reputation for industry groups has to vary from bank to bank. Generally it's hard to switch groups unless research management identifies you as a star and you feel that you are limited in your current group (or unless there is a personality issue they want to resolve).

Mar 4, 2016

How does one get into Jan Hatzius's GIR team? Boy they're the dream team.

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Jul 2, 2016

I wanted to shine a light on two parts of the job a lot of prospective analysts don't know much about - "marketing" and "corporate access."

Last week, I spent an entire day (8 meetings from 7 to 4 PM) meeting with analysts and portfolio managers in a US financial center, talking about my view of the industry post earnings. Many of these meetings were introductory meetings. Certain PMs were just starting to look at my sector, so I explained to them the various revenue trends and valuation metrics. I will keep in touch with most of these clients. Hopefully, over time, I will win broker votes from these clients, the clients will direct more of their business to my firm, etc. Senior analysts spend 50-75 days of the year at a minimum doing this. It is a major part of the job.

This week, I will follow up with all of my companies in attempt to secure "corporate access." These include non-deal roadshows, lunches, conference attendance and other types of meetings. Investing clients find this type of content extremely valuable. Banks that can give their analysts and portfolio managers direct access to management are highly regarded.

    • 1
Mar 6, 2016

Is there any possibility of working in ER outside of NYC?

Jul 2, 2016

Most ER is in New York. A few firms are starting to base more junior employees in other cities - for example I believe Goldman has some ER in its big Salt Lake office. Some smaller, regional banks have equity research in their local cities (Cleveland, Philadelphia, Atlanta, etc), but most ER (like most securities finance) is in NYC

Mar 9, 2016

Thanks so much for doing this Fanalyst. I have a few questions, and was hoping that you could shed some light.

1) How does MS ER stack up against the ER divisions at other BBs in terms of compensation, reputation, and exit opportunities?

2) Beyond the VP level, how does compensation progress and what do the compensation figures look like at the ED and MD level?

If you could provide any information on either of these topics I would greatly appreciate it. Thanks!

Jul 2, 2016

Morgan Stanley is a very large equity trading and equity issuance shop. As a result, they have a large equity research department that they invest in. They traditionally haven't been super highly ranked in measures like II but it is a good department in terms of pay, exit opps, reputation, etc.

Compensation at the ED and MD levels can range anywhere from the mid 6 figures 400K is so up to the millions depending on how good the analyst is. Top analysts (II ranked, top tier broker votes, etc) can make in the $1mn to $2mn range. In 2005-8, top analysts were making $5mn or more in some rare cases, but that doesn't happen any more.

Mar 9, 2016

I will be interning this summer for a BB in their Research department (not sure if ER or CR yet). I was just wondering if your team has had any interns. If so, do you have any advice on the qualities, skills, and traits that make for a successful intern? This can include softer skills as well as technical ones that you have seen the most successful interns have. Any advice would be greatly appreciated - thank you!

Feb 26, 2016

Hey thanks for doing this, a couple of questions:
1.) Currently a junior, and interning in Big 4 Valuation Services this summer. Went through the SA process for ER and gained some traction at some shops, but unfortunately it didn't work out. I'm going to be pursuing FT recruiting for ER this summer, do you see this move from Big 4 Val to ER happen often/how possible is it?
2.) Also would you suggest having a strong interest in a specific coverage group for Full Time recruiting, or try to keep it more general.

Jul 2, 2016

1) I have seen this move done before
2) I would keep a general outlook. It's good to be able to talk about an industry in an interview, but that particular industry group may not have an opening when you are applying for a job. It's not like banking when every single industry or product group will be hiring every July / August.

Mar 10, 2016

From what you mentioned ER seems like a narrow field in terms of those who are in it and those who aren't. What is the best way to stand out as a entry level analyst within a bulge brackets equity research arm?

How well do Equity Research Analysts understand companies? It seems like sometimes they are just peddling information to generate sales.

Jul 2, 2016

The best way to stand out is to do good work for your senior analyst, be responsive with sales and trading and to be visible within the department (attend morning meeting, network, etc)

Many research analysts are extremely knowledgable about companies and their industries.

Feb 26, 2016

Yeah that's what I've noticed from talking with associates. Thanks for the reply

Feb 26, 2016

Yeah that's what I've noticed from talking to associates. Thanks for the reply

Mar 14, 2016

Hey Fanalyst, thanks for doing this AMA, it's quite useful for those interested in ER. Since this is an area where I'm deeply interested, would you mind helping me on knowing 1) my chances to break in and 2) how to improve or increase those chances? Here is my profile for what is worth:

Work:
- Currently a senior analyst in the valuations & modelling team of a B4. I don't specialize in a particular industry but I have more work from construction, infrastructure and real estate industry.
- Previous experience (3ys) in other department at other B4 (transfer pricing), but working for the same industries (incl. international experience)
- summer internship in the wealth management division of a top bank.

Education:
- Level III Candidate
- Bachelor in Laws and Diploma in Business (top 3 school in my country)

Thanks!

Mar 17, 2016

Hi Fanalyst, thanks for doing the AMA. I have a Ph.D in finance and do research in corporate finance. Could you give me some advice how to break into the ER industry? What would be the advantages or challenges for my background? Thank you very much.

Mar 29, 2016

@Fanalyst,

Thanks for doing this. I have a couple questions pertaining to the best way I should try to break into ER or AM. I'm a junior at top 10 undergrad B-school, studying finance and Econ. My grades are mediocre (think 3.2). This summer I'm interning with Wells Fargo Advisors in a PWM role, where I basically will be supporting more senior guys. I was wondering if I had any chance at potentially using my experience this summer to lateraling into either a research job or AM job at WF. What advice would you give, or are is my chance for a industry swtich simply a long shot? Keep in mind that I still have time to raise my GPA, and I'm also planning on taking CFA level 1 in december which I believe will strengthen my resume.

Mar 9, 2016

Hi Fanalyst,

Thanks for doing this, I really appreciate your insight.

I was wondering what the progression is of the hours you work at a top BB ER gig in NYC. From my understanding, it seems as though 1st year analysts that just got out of undergrad will be working something like 7am-7pm. Would you mind verifying this and please provide some insight into how hours progress into the post-MBA associate, VP, ED, and MD levels?

Thanks so much!

Feb 29, 2016

Interested in this as well.

Feb 22, 2016

Next stop: Flavortown!

Jul 2, 2016
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