Can any equity researchers in here tell me what exactly will I be expected to do if I land a job as an equity research analyst? And what computer skills and financial skills should I have? Please be as concrete as possible?
| +72 | Q&A - Buyside Equity Research Analyst/PM | 27 | 5d | |
| +31 | How the heck do you learn all of this stuff? | 5 | 2d | |
| +28 | Getting Frustrated | 10 | 2w | |
| +27 | My experience on the sell side | 20 | 1w | |
| +22 | What’s my next move? | 6 | 2w | |
| +20 | CS Major looking to switch and break into high finance - is it over for me? | 6 | 3w | |
| +20 | Vanderbilt vs. Notre Dame M.S. in Finance Equity Research placement | 10 | 3w | |
| +18 | Biotech ER vs IB | 16 | 2w | |
| +14 | Heard they don’t model at Oppenheimer | 10 | 1w | |
| +13 | ER time line and ways to break in help | 17 | 2w |
Career Resources
Get instant access to lessons taught by experienced private equity pros and bulge bracket investment bankers including financial statement modeling, DCF, M&A, LBO, Comps and Excel Modeling.
I am an Associate in ER at a BB.
You will be expected to be able to analyze the financials of the firms in your team's coverage. You are expected to come up with tradeable ideas that are profitable for the desk and/or for institutional clients. You are not expected to acknowledge the existence of retail clients. Good writing skills are a must, since you publish analyses to the Street. You will write A LOT. You must also be very skilled in Excel (not just for financial models), as the job is extremely data-intensive.
You will also be expected to work from about 6 or 7 am until about 10 pm for an average day, just in case you were wondering about the hours.
I'd agree with the above comment. Although the hours really depend on what bank you work for and what group you're in. I'd say a typical day for me starts between 7 and 8 am and goes to between 7 and 9 pm; with the occasional project/report that keeps me there until midnight.
haha, those are garbage hours man.
I do 55-60 hours a week max and no weekends.
DO agree with the writing, but the amount of data analysis depends on desk. You're not sitting there opining over DCF's if you're a consumer analyst, compared to a say pharma analyst.
60 hours max? Man, what part of NY are you guys in? I can think of about 150 people that might want to join up.
Never mind, you're across the pond
Thanks for all the information from you guys. I am currently studying for CFA. If I do land a job as an equity research analyst, will I even have time to study for CFA at all?
first land the job and then see. CFA is hard and really depends on how intense your desk is - but it is very useful. I have learnt a shit load from my CFA studying.
bingo bango bongo. If I were in NYC, I'd jump off a bridge.
Make a course first. It's neccessary to become an equity research analyst...
Equity Research FAQ (Originally Posted: 03/07/2011)
Hours: 40-80/week depending on earnings, roll outs, roadshows, marketing, etc...
Comp: 55-80 base for associates with 10-50% bonus
Prestige: No prestige in the firm you work for, more important is your analyst and if he has a marketable franchise. Working for a no name analyst at a BB is not as good as working for II rock star analyst at no-name shop.
Interviewing: Have a stock pitch ready (preferably in a sector/industry outside of the one you're interviewing in), be able to take a press release for earnings and sift through the fluff for important info and then writing a note on it, be able to build an iterative 3 statement model with a full comp table and DCF...
Exit Opps: B-school, HF, AM, IBD, Industry/sector you covered as management.
I think that covers it all, these questions are asked all the time. By all means please fill in where I may have missed something.
This is helpful, thanks.
+1
Good info. I assume you're in the industry, random question I always wonder, why don't you get the Cert User star?
I am not interested in divulging the information to do that. You are correct, I do work in the industry though.
See, that's the only possible reason I could come up with. Good to know I was on the right track.
I just want to clarify what he says only applies to research on the sell side. but kudos on the guide
I guess using words like Roll-Out, Marketing, and Roadshow (which could go either way) would have been a sign this is geared towards sell side research. Providing color on buy side research is very difficult as their are many intricacies that are firm specific.
ray, you should make a buyside ER FAQ and see what comparisons exist
Cosign the OP.
On Buyside research: don't ask comp at BB vs Boutique; I speak for a lot of people in saying I would rather be a buy side analyst at several boutique firms than I would at GSAM. The BB buyside firms are as follows: Putnam, T. Rowe, Fido, Wellington, PIMCO, BlackRock, Janus, Vanguard.
what about mutual funds like franklin templeton & MFS?
I know someone who is a new associate and makes near 100 base. Is this for real?
He did join after 3 years of working in a different industry, but nothing in ER.
Yes, this is absolutely possible. The majority of the Street, assuming you work for a BB or reputable MM/Boutique, pays associates in the $60-100K range for base. There are outliers depending on location, size of firm, your experience, how long you've been there, etc.
Ray, could you please share some insights on different BB's ER strength and current situation? Based on institutional investor, it seems that JPM, Barcap, and BAML are top 3 BB ER now. I heard that CS ER doesn;t have bonus this year. Nomura is expanding. GS and MS are ranked very bad (8th and 9th if I recall correctly) but MS hired a lot of senior analyst back to late 09 so they may come back this year.
I would also like to hear on your thoughts on culture and compensation at different BBs. I know GS is competitive while CS is quite laid back. Not too many ppl talk abt sell-side research here.
thx
I think culture is different from firm to firm. I guess JP has the best culture in my opinion as they retained a lot of ex Bear guys. Barclays retained a lot of the Lehman people and they are the most stuck up culture. Goldman I have no clue but I would guess it is pretty intense. BofA got a great staff with Merrill but they are big deal chasers (Hank Blodget...). CS I think pays the best and it is supposed to be a great place to work. MMs like Stifel, KBW, RBC, Baird, and Blair all put out good stuff.. Stephens as well. Comp is pretty much the same across the street, it goes up with experience... I touched on that in my original post.
So I guess I would rank research like this: 1)DLJ 2)Bear Stearns 3)Lehman Brothers
So CS JPM Barcap
Ray, thanks for your input. Your comments on CS is high but why they had zero bonus this year, according to deal breaker.
I know the old Bear and Merrill have good research but there were too many turnovers after 08. I recently read MS's ER handbook (all senior analyst's bio) and it seems that they recruited a lot of talents from JPM. What do u think about them? I heard that it's really bureaucratic there. As you said, JPM is probably is best sell-side research now and didn't really cut headcount. Other BBs laid off many ppl during the past two yrs, especially MS. Many ppl are saying that the sell-side business will shrink even more. What do u think?
CS did give bonuses. If it was >$50k it had a lockup/deferral period, I think you read the headline number; you got to dig through the fluff. I don't know much about MS, I don't think their research is very strong. They could have picked off the JPM guys who were displaced by the Bear people. Like I said before all the legacy firms are the best; i.e DLJ/CS, ML/BofA, LB/BC, BS/JPM.... Also Citi is alright....
The Sellside model is a failing value proposition. It is a cost structure, very few of the analysts can bring in what they make. Many top analysts fetch $1m plus a year (add in travel) and it is very doubtful they generate that much in commissions and votes... Beyond that the buyside has their own research and instead of it being geared to a wide audience and strategy (Like sell side research) it is geared towards their own strategy. I think 99% of the sell side wants to be on the buy side. Don't get caught up in the name of the firm you work for, in ER that does not matter.
sell side research at BB's just doesn't make sense. work at an independent firm
It just serves a different purpose, a lot of times it is more about bringing in banking deals instead of putting your balls out there.
Also Bernstein is a great pure research shop, don't know how I overlooked them.
Ray, how many names do you cover? Thanks
How useful is getting an MBA? I interned in ER but ended up working in sales. I like my current job, but ER was much more interesting and since I come from a liberal arts background, I'm thinking that bschool is the only way for me to open up better options. Would it help to intern for free at night/weekends, or is an MBA the most efficient way to go?
FInkle,
This is good stuff. Only point of contention:
A large portion of my day is talking to buy-siders to get them up to speed on names/industries. If sell-side provided little analytical value, I don't not see why they would constantly call. Maybe the buy-side is in the process of increasing headcount to fill this responsibility, but what better place to meet that demand than from those sell-siders already doing it for them?
So even if the sell-side if dying (don't necessarily agree), it seems like we would be in a good spot to take advantage of it.
I agree 100%.
The Investment Banking side pretty much needs sell-side reports when reviewing a deal/industry. So there is some value there.
Hey I am pretty new to this and I am wondering what skills are essential for an intern in ER. I know it will depend largely on the company/team/analyst, but what are some specific skills I should brush up on before summer. My skills are definitely more general at this time. I know how the financial statements relate, e.g. how depreciation will affect earnings and cash flow, etc. I'm pretty good with execl (i.e. pivot tables, formulas, vlookup) but I use the mouse and aparently thats frowned upon. And if I had to build a DCF model from scratch I'd be screwed right now. My interviews mentioned market surveys, so should I brush up on my stats.
I don't want to be the coffee fetching intern, so where/how can an intern add value. Just looking for some guidance from those of you with experience, thanks.
You will most likely not be building models, maybe updating and maintaining the comps and economic data. I would be surprised if you were the coffee fetcher, however during earnings you may have to do something along those lines.
Things I would stress; Be helpful, ask your analyst and associate what you can do to help them is there any ad-hoc project you can take ownership of? Be very attentive to detail, when updating models use the right font and color! If helping write a note make sure you read it over 10x before turning it in. Don't be the first one out, and be in before your analyst and associate; I think those go without saying but you never know. Try and be as entrepreneurial as possible, I would guess your time will be very independent. Don't bother your associate unless you have employed every feasible resource and still cannot figure it out. Don't be a know it all however have some ideas, you never know when they may use them (no joke).
I guess back to the model subject; some analysts are writers and some are model builders and all should be salesman. I feel a lot more analysts are modelers b/c they can set it up how they picture it. Although some analysts like for their associates to take ownership of the models, I guess it is case by case.
To piggyback on the "talking to buyside folks," at my firm the senior analysts each cover multiple sectors with many subsectors and industries within them, plus their other responsibilities. We often rely on sell-side research to get up to speed on the specific subsector and the company's peer group. It's not practical for any but the largest buyside shops to have the kind of granular research coverage that bank ER does, where a single analyst and his junior staff can cover just semiconductors, for example.
Ray,
This is a great thread. What is the compensation like for a BB sell side research associate (working for a top analyst) who moves to a top buyside shop after a few years of work? Sorry if this is a tough question to answer, but I am really curious to know. I have heard numbers, but they have varied pretty significantly.
Thanks, Aces
Depends, would you be an analyst/jr analyst/associate on the buyside? I'm guessing (base) $200-$250K/$125-$190K/$60-$90K....
Upon that; I think the fact you come from a BB will have little bearing on you salary but working for a top analyst (II rated, I presume) will probably have a little bump b/c the skill set you picked up under the SS analyst is top notch.
What is the motivation of being Research Analyst/ research assistant (sell-side)? What are attractive about this job? other than financial rewards, is there genuine satisfaction behind?
I read a lot discussion about the job, the life, but little about why choosing Equity Research as career. Please kindly share some opinion. truly appreciate!
For great justice.
I'll tell you why I like the job. 1) For the most part, every day is different and keeps you on your toes. 2) You're very involved in whats going on with the markets, the economy, etc. 3) There's a big sales aspect to it, so if you like sales its a great way to have a sales component to your job without having to pick up the phone and ask people for money all day long. 4) This may not be appealing to everyone, but there's a lot less risk than a buyside gig. You're not being judged on your P&L or your returns, you're judged on how much the sales force and the buyside accounts like you. You don't always have to be right, you just have to have an opinion and be a good source of information. 5) It's very interactive. Even at the junior level you're talking to sales and your companies and some accounts frequently. It steps up your learning curve as you dont want to sound like an idiot and breaks up the day from sitting in a cube by yourself all day working in excel.
40 hour weeks is a gross underestimate for sell side. it is around 60 hour weeks minimum at the sell side.
7-8 AM morning calls to fight for sales' attention, gather all the overnight data. digesting all the news after 5pm for all those preannouncements pukes.
16+ hour days during earnings season is very typical where you will have to help cranking out research reports (which no buy side really reads) by the next day. say, updating/cranking out one company takes 3-4 hours, that easily adds 6 hours to your day when two companies reports at the same time. if you are lucky, you will have 4-5 companies reporting at the same day.
and during non-earnings season (two months per quarter), you will be busy building relationships with covered companies, going to all those stupid ass industry specific conferences, talking to various leads for 'channel checks', and worse hosting bus tours, company visits or conference events.
and depends on industry, dcf is not used much. or should i say useless. most of the time your senior guy will pick a stock price and you will have to manipulate dcf to that number. who the fuck can predict 10 quarters let along 10 years.
havent heard too much movement between ER and ibd except on the top end.
Were you trying to refute the 40-80 hours by placing your guesstimate within the realm of my average/median?
DCF is useless but you should still be able to build a model with one, I know a few analysts use them, the buyside is pretty unconcerned with the price target anyways. They are looking more for catalysts. Totally agree about predicting 10 years in advance, some kid sent me his initiation with a 10 yr projection- I laughed. Predicting more than 2 years is futile.
40 hours is definitely low end but there are some weeks where I work 50 and I'm twiddling my thumbs half of the time. And I'm on a 2 man team. I can't imagine what some of these 3-5 man teams are doing all day during slow periods. Also, I agree that earnings recap notes are worthless. Unless something major happens, they're not read and 80% is just reporting. I feel sorry for associates at banks that write up marathon recaps, like Jefferies for example.
No disrespect. Just pointing out 40 hour weeks is a gross underestimate. Sometimes between morning calls and aftermarket hours, you just have to sit through the whole market hour on youporn, SEC style.
Earnings seasons report marathon is not fun but necessary.
3 men teams are usually structured such that the analyst goes on road trip all the time with maybe an associate, and remote control office team to shape research reports to their liking. Haven't heard too many groups that do 3+ men research team on one specific industries; that's way too much.
How many stocks does the average team cover?
Dependent on size of the firm, volume of trade generated, etc.
There are 2 men teams covering 8 stocks in some BB and there are solo analyst covering 20.
Most of the time its staying below 20 for depth and earnings season sanity.
Id say 15-20 is about the right size for a two man team.
A few more Q's:
How much modelling is involved in ER?
How hard is it to make the switch from ER-> IBD?
Pay is 55-80 base for associate...I get confused with ER because Associate comes before analyst? Is this correct?
How does pay progress from there with a BB?
How difficuly would it be to break in as a qualified accountant with CFA?
1.There is a bit of modeling involved. Mostly around earnings season when you are updating and forecasting. You will also build models from scratch for initiations. In addition, sometimes clients call and request projects that require some unique modeling. I would think it is not as intensive as IB. Tons of writing.
2.I'm not entirely sure. I think its more common to go from IBD-->ER. That being said, I don't think it is impossible to go ER--> IBD given you get your feet wet with the modeling.
Associate comes before analyst. Base is within that range and sometimes much higher on the upper end for BBs.
Depends on your analyst's pay most likely. That is a function of how much volume your stocks trade on your trading desk, sales votes, NDRs, marketing trips, how much the buyside pays your firm etc...
Also depends on your education, experience and how good of an associate you are...I've heard of some post MBA associates with 5 years of experience making 150-180k after bonus.
my thoughts:
1) having a BB name on your resume in ER does carry significant weight, especially when you are looking to switch jobs. If you want to make Analyst one day, it's probably going to be helpful to have a bb on the resume. but i suppose everybody around wso wants to work on the buy-side.
2) sellside boutiques do indeed have II ranked Analysts, but it general the whole deal with the boutiques is that those Analysts usually focus on research rather than vote-getting. A serious II ranked contender needs to know everybody in the buy side world, and to get to that point, you have to seriously ramp up the travel (and you usually have to get an extra associate on the team to help write / model in your absence). boutiques don't want to deal with the extra cost and hassle.
3) BBs have huge sales forces that act as a megaphone for an Analyst's research, and trading floors to generate revenue off of it. At a BB, when an Analyst makes a big call, every sales guy in the firm is going to be talking to everybody they know on the buyside, and that's in the us, europe, and in asia. It's a serious perk for being an analyst at a BB, which leads me to my final point
4) being an II ranked guy at a boutique means you are loving life, IMO. because it means that the boutique probably paid you an absolutely huge guarantee in order to get you to come there. And they probably brought the whole team there, so no changes to anything. But look, those roles are few and far between.
oh, and i would def like to work for an ii ranked analyst at a boutique vs some unknown at a bulge.
Do most teams carry two or three analysts (incl. senior)? If three, how many stocks should that team ideally cover relative to a team with just 2 analysts?
Also, is it uncommon to see some senior analysts working along (ie: no junior/associate)
Thanks.
Rule of thumb 6-8 stocks per person on the team. It is somewhat unusual to see a senior analyst with no junior - usually happens with younger guys who cover a subsegment within a larger team or a very small marginal industry
.
How do you get to work under a top ranked analyst? or is it just the luck of the draw?
Voluptatibus cum sunt et corrupti qui. Nemo eos magnam consectetur molestias sed quo. Porro totam eius eligendi officiis perspiciatis. Amet autem pariatur officiis provident magnam cumque ullam. Accusamus est molestiae culpa adipisci aperiam dolores.
Repellendus tempore laborum eligendi commodi. Eaque non sequi ad veniam adipisci reiciendis est rerum.
Dolore beatae consequuntur ipsa quam ut. Sit id labore molestias quo eum voluptatum. Dolor non cupiditate error optio. Exercitationem deserunt voluptas repudiandae accusantium. Sequi sed magnam architecto sit ea fugiat. In velit iste porro pariatur eum libero corporis molestiae.
Est deleniti omnis itaque dolores praesentium labore rerum. Accusamus dicta necessitatibus ex corporis perspiciatis ut. Nihil voluptate quia sequi et. Et sapiente inventore ea non qui non dolores.
See All Comments - 100% Free
WSO depends on everyone being able to pitch in when they know something. Unlock with your email and get bonus: 6 financial modeling lessons free ($199 value)
or Unlock with your social account...
Sapiente id quidem at rerum perspiciatis. Perspiciatis beatae consequatur dolorum ducimus aut. Nemo tenetur est rem laudantium. Suscipit qui quae blanditiis voluptatem. Illum dolores vel laudantium minima.
Iusto atque nam quas labore. Ut et exercitationem tempora quia. Quia omnis neque atque vero eveniet repellat. Illum cumque consectetur quia et placeat dolore. Omnis aliquam quibusdam fugiat aspernatur. Officiis hic similique est odit assumenda iusto quibusdam.
Rem ipsam quaerat et reiciendis aperiam. Magnam in reiciendis facere animi enim nobis quis quis. Eum dicta sit aut doloremque sint. Eveniet necessitatibus aut velit optio ullam.
Numquam vel vero nam autem omnis. Eos voluptatum labore sint.
Id saepe velit et aperiam nobis non. Nihil illo libero et ut exercitationem quam. Qui accusantium eveniet quis libero accusantium voluptate.
Error est et est necessitatibus laborum ipsam. Fuga vel in sit cumque perferendis. Modi quia recusandae qui exercitationem earum accusamus. Et excepturi vel in consequatur. Corporis ducimus quia incidunt magni est. Eos at voluptatem voluptas et consequatur.
Autem quas veritatis nihil quasi. Dolorum minima incidunt voluptate aut. Id ut reprehenderit quia exercitationem modi non consectetur. Enim nihil vero quos vero placeat.