Equity Research: A Day in the Life, Pay, and Exit Opportunities – Got Hedge Funds?

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Equity Research - On the JobNumi Advisory has advised over 400 clients by providing career coaching, mock interviews, and resume reviews for people seeking jobs in equity research and investment management (full bio at the bottom of this article).

You’ve broken into equity research by following the detailed advice from our interviewee, and now you’re about to start working.

If I had a magic 8-ball, I’d guess you might be curious about:

  • What an average day in your life will be like.
  • How much time you spend on modeling vs. reports vs. research.
  • How much money you’ll make – at the entry-level and once you’ve become Chief Monkey.
  • What the hours and culture are like.
  • Exit opportunities and how you can leverage ER to get into top business schools.

Luckily, you won’t be so curious after reading part 2 of this interview – where we answer all of those and more.

A Day in the Life

Q: So let’s walk through what an average day in your life is like – when do you get in and start working, and what do you do?

A: I would usually get in around 7:30 AM and I’d check for important news and research notes relating to companies I covered right away.

I might spend 15 – 30 minutes catching up on emails from traders and salespeople, reading the news, and understanding the market as a whole. Stock movements can be affected by anything from the company itself to global economic news.

Throughout the rest of the day, it’s a mix of maintenance work – updating models, for example – researching companies (mostly by speaking with the buy-side to see what investor sentiment is), and then finding new companies to initiate coverage on.

It might take 2-3 months to initiate coverage on new companies, so we have to balance that with all the ongoing work and make sure we’re not sacrificing quality by covering too many stocks at once.

Equity research is most well-known for the reports we issue, but ironically that’s not what takes up most of my time – each Associate might cover only a few companies and we only issue a few reports each quarter.

We issue reports when companies announce earnings each quarter, and then a few times in between for incremental information and news – an investor conference they hold, a big M&A deal, or a major new product announcement from a competitor, for example.

The most important part is to predict the company’s earnings in advance – shortly before they announce, we’ll meet with the management team, survey customers and partners, and do other research to figure out whether they’ll come in at, above, or below the consensus.

This work is split between the Associate and the Research Analyst – the Associate handles the tactical aspects while the Research Analyst is the first point of contact since his/her name is on top of the report.

Q: So it sounds like just as in M&A, the amount of modeling work you do is greatly exaggerated – though I think people understand that a bit more with equity research.

How do you decide when to initiate coverage on a new company? That seems like a huge decision given that equity research is small and that teams have limited resources.

A: Most research teams cover 8 – 15 companies – so if you’re responsible for large-cap tech stocks, your team might cover Microsoft, IBM, Intel, Cisco, Dell, Oracle, Google, Apple, HP, Yahoo, and Amazon (in real life the team would be split into hardware, software, and internet).

When you pick companies to cover, you want names that will drive trading volume. They might be large-cap names that always have lots of trading volume, which is why most bulge bracket banks focus on the biggest companies. Or, they could be small- or mid-cap names that have less analyst coverage, but where you can offer a differentiated opinion and potentially make a name for yourself that way.

Remember that equity research exists to give buy-side investors ideas and to encourage those investors to make the trades through the bank and generate trading commissions like that – there’s no point in covering companies that investors don’t want to buy or sell.

Sometimes we pick a new company to cover because an existing one was acquired or otherwise de-listed; other times it’s because there’s some new development like a partnership or a change of strategy that makes a company more interesting to follow.

But it’s always a balancing act and there’s no easy way to make decisions – sometimes we think a company would be great to add, but we just don’t have the resources to do so.

One final point: sometimes we may also cover a company that gets little attention from other equity research analysts, but which may attract many investors – the key there is to make a different call than everyone else.

Lots of boutique and middle-market banks and research firms take this approach and purposely focus on lesser-known names because they can add more value when there aren’t 25 other analysts covering the same stock.

Q: Right, I think a lot of people forget that equity research actually does generate revenue – just not directly like you see in banking and trading.

So how much time do you spend on modeling vs. writing reports vs. doing research and speaking with companies?

A: I can’t give an exact percentage here, but the majority of my time is spent on research – as I’ve mentioned, we don’t issue reports frequently enough for them to consume a lot of time.

And similarly with models, it might take some time upfront to build the model in the first place but once it’s done we just make small tweaks and update it for earnings announcements and important channel checks – we’re not going to scrap everything and rebuild the models for fun.

Q: You realize I’m not going to let you escape without giving estimated percentages, right?

A: Fine, if I had to guess:

  • Research / Conferences / Speaking to Investors and Management: 65%
  • Reports: 20%
  • Modeling: 15%

And again, that’s because most of the modeling work consists of small tweaks and because even the reports themselves, aside from company initiations, are not terribly long most of the time.

Q: So then what are the best and worst parts of the job? It actually sounds pretty cool since you talk to real people rather than burying yourself in Excel and PowerPoint all day.

A: I’d say there are 3 “best parts”:

  1. You learn how to analyze companies from the perspective of investors;
  2. You develop credibility and detailed knowledge about a certain sector;
  3. You get to interact with investors and senior management teams.

You might get #2 in banking depending on your team, but since you focus more on transactions you don’t think about companies in the same way public market investors do.

And you may get #3 to some extent, but more so at boutique and middle-market firms.

The worst part is that you have no skin in the game – you’re always making recommendations for other people to follow.

The hours are also long and you’ll be in your cubicle a lot, but that point above motivates a lot of people to move to the buy-side.

Hierarchy, Advancement, Culture, and Pay

Q: Let’s talk about the hierarchy in equity research, which you mentioned was “flatter than the investment banking” earlier. Is it pretty much just the Associates at the bottom and Research Analysts at the top, with none of the silly middlemen as in the investment banking hierarchy?

A: Yes – it’s more like how a hedge fund or asset management firm is structured where you have 1 head person making decisions and everyone else below him/her executing and coming up with new ideas.

There is a quasi-mid-level in that you may have Senior Analysts and then just Research Analysts, but it’s much less hierarchical than IB. Equity research is more about how good you are at servicing clients and coming up with insightful ideas – we don’t need a truckload of people as you do with M&A deals.

There are usually 2 – 3 Associates and 1 Senior Analyst on each sector team – so if we’re covering 15 companies, each Associate might cover 5 names.

Q: So that would be for one sector team – if you were covering software companies or pharmaceuticals or REITs, for example. What about the total number of sectors covered by banks and the total headcount in equity research?

A: The sectors covered depend on the bank, but the bulge brackets cover everything – most mid and large-cap companies with a few smaller ones thrown in as well.

Boutique firms might cover only 5 – 10 sectors since they may not have the resources to do more than that; and then you get firms like Meredith Whitney’s company, which specializes in the financial institutions sector.

Middle-market banks might be somewhere in between, but they focus more on smaller-cap companies and stocks with less analyst coverage.

In terms of headcount, middle-market banks might have 30 – 60 Analysts and Associates total in equity research and bulge bracket banks might have more like several hundred Analysts and Associates across all sectors.

I realize those are broad ranges, but it depends on the bank, the geography, the economy, and other factors so it’s hard to give more exact figures.

Q: I was expecting detailed breakouts of the headcount by region and sector, but I guess I’ll overlook that since we know each other.

Since the hierarchy is relatively flat, does that mean it’s difficult to advance? Or is it like banking and PE where you still see the up-or-out culture?

A: It’s difficult to advance by staying at one bank – most advancement comes when you leave to join another bank and they promote you, or when you leave to go start your own firm.

Senior Analysts have cushy jobs and few leave willingly – but if one does happen to leave and you’re well-respected, you might get a chance to take over and cover your own names.

And if you build up a good reputation among investors, someone else may hire you – whether it’s another bank or a hedge fund.

Sometimes Associates have a difficult time advancing because they bury themselves in Excel all day – but that’s the wrong approach because no one cares how fancy your model is. Both buy-siders and other sell-siders generally care more about how insightful your ideas are and how much they know, like, and trust you.

So you have to get out of your bubble and go meet real people, build up a reputation, and make good decisions if you want to advance.

Q: You just mentioned that it’s not as much of an up-or-out culture – what’s the turnover like?

A: People here usually stick around for 2 – 4 years before moving on. It’s not dramatic like in banking because there’s no real reason to fire Associates – they don’t cost the firm as much as they do in banking, and it’s valuable to have people who know what they’re doing and don’t require a lot of supervision or training.

So you could conceivably stay an Associate in equity research for much longer than you would in banking – you would still get promotions and pay increases along the way, but your title wouldn’t change much.

Q: You just mentioned that Associates cost the bank less than Analysts or Associates in IB – I’m assuming that’s because ER doesn’t directly generate revenue? What are the typical pay ranges?

A: Base pay at the Associate level is pretty much standardized – it’s around $65 – $70K USD and bonuses for entry-level Associates might be $25K – $45K USD. If you’re at the MBA-level you would see considerably higher ranges there.

As a 2nd or 3rd year Associate, you might be making $70K – $90K USD base with bonuses in the $35 – $60K USD range.

All-in pay caps out at around $200K USD for Associates – and that’s if you’re very experienced or you’ve been hired out of business school with an MBA or other advanced degree.

As a Research Analyst, base pay is $125K – $150K USD and your bonus will be some multiple of that – all-in, you’ll probably get at least $300K USD and even more if you’re at a larger bank. Those numbers go up even more if the economy is good.

In the late 90s things were much crazier and you saw Analysts earning $10 million+ in the case of true superstars, but that won’t happen anytime soon due to increased regulation.

Q: Analysts must hate themselves – $300K is barely enough to live on, especially when you get bottle service every night. Why is the pay so ridiculously low?

A: The sad thing is that I can’t tell whether or not you’re joking right now.

Q: Yeah, that was sarcasm. Anyway, how are bonuses determined if you don’t generate revenue directly?

A: It is difficult to link us directly to trading commissions, but they take into account a few factors:

  1. Rankings (e.g. Institutional Investor, Greenwich Poll) – How highly investors on the buy-side rate you and your ideas.
  2. Performance of Your Calls – Did you say “Buy” right before the stock price doubled?
  3. Performance of Yourself – How did your accomplishments over the year compare with the goals and expectations that you and management set at the beginning of the year? Have you shown continued improvement along with rising potential?
  4. Client and Trading Commissions – Did your reports and conversations generate fees from investors trading through your bank?

People always say that equity research is “non-revenue generating,” but that’s like saying that marketing at a normal company is non-revenue generating.

It does generate revenue, but it doesn’t do so directly like sales would – that’s why people constantly get this one wrong.

Q: So you’re still making less than bankers because your link to revenue is a bit hand-wavy – but how much do you work to earn those bonuses?

A: The average day is 7:30 AM to 7:30 PM – so about 12 hours per day, or 60 hours per week. Sometimes work goes on longer, so the average is more like 60 – 70 hours per week. It’s not quite as bad as banking, but don’t come into this expecting a 9 to 5 job.

The hours get worse in the midst of earnings season and also during industry conferences – sometimes we work until midnight or later, so it pretty much turns into banking hours then.

Earnings season is obviously busy: we have to update all our models and issue new reports as all our companies announce how they did.

But people forget about the industry conferences, which are really hectic because you’re running around meeting people all day and then must do your research and other work at night.

Q: Do your co-workers at least make it tolerable? Are they cool, or do you get visions of Bateman when you bump into them?

A: Overall, equity research culture is more reserved than what you see in banking. IB is more of a “work hard, play hard” group, but equity research attracts a different type and people don’t want to go out and drop $10,000 on bottle service – at least not every night.

It’s also quite a bit different from the trading desk, where people tend to speak their minds readily and are very direct – sell-side traders are not around clients much, if at all, so bluntness doesn’t matter there.

But in equity research you must be cool and collected, yet still have an opinion at the same time. You can’t just say what happened recently in the market – you need to predict how a stock will perform in the future, even if that means lightly challenging your boss occasionally.

It’s a tricky balance because you need to be independent, but not so independent that you piss off everyone else.

What You Do Next: The Infamous Exit Opps

Q: You mentioned earlier how people in ER often advance by hopping to other banks – but that’s still the sell-side, so I don’t count that as a true exit opp. What’s the most common path to the buy-side?

A: Hedge funds are the most common option because there’s a direct skill set overlap – you’re analyzing public market investments and making recommendations. It depends a bit on the strategy of the fund as well – a shop that specializes in commodities won’t be as good a fit as a pure long/short equity fund.

It’s also not uncommon to go into corporate finance at a normal company or investor relations – especially if you’ve covered the company before and you know the management team.

Sometimes you see people going into business development or private equity as well, but private equity is tough because you don’t have much experience working on transactions. You do understand companies’ filings and how investors might think about them, but overall it’s more of a challenge going from equity research into PE.

Q: What about if you want to go to a top business school? Do you have a good shot of getting in if you’ve worked in equity research?

A: From an admissions standpoint, they don’t view you too differently from bankers and other finance types – people come from so many different backgrounds that all the financiers sort of get lumped together.

The biggest issue is that it can be hard to get good recommendations since you work in much smaller teams. In banking, even if your Associate hates you, you could always go to a VP or Director or someone else on your team to get a recommendation – even at smaller banks deal teams are larger than what you find in ER.

In equity research, you rub elbows with fewer people within your firm, and so the quality of your recommendations is more random. However, if you have close working relationships with research management, or even salespeople or traders, you could call on them to vouch for you even if you can’t ask your boss for a recommendation.

Anyway, I wouldn’t worry about this issue too much because the bigger issue is getting solid internships once you’ve been admitted to business school – competition is fierce and everyone is going for the same roles at top schools.

Research is definitely a good background to have for business school, but it’s not that much different from other fields in finance.

Q: That makes sense – the point you raised about recommendations is an interesting one and I never would have thought of that before we spoke.

What do you think about the future of equity research? Everyone seems to predict that the end is upon us every so often – is it still a good field to get into?

A: Most of those predictions are greatly exaggerated – ER will continue to exist for the foreseeable future, even if it’s not what it once was.

You’ll no longer make $10 million+ as you might have in the late 90s, but that’s because it has become more regulated and there’s a lot more competition these days.

If you’re looking to build a solid foundation in finance and learn how to analyze businesses from the perspective of investors, you should consider equity research.

It’s as good as any finance job out of school, and while you may not get quite as many exit opportunities as in IB, there are plenty of other benefits – especially if you have a passion for the markets and you see a long-term career in research, asset management, or hedge funds.

Q: Great – thanks for your time, really enjoyed this interview.

A:Same – talk soon!

Want more personalized advice from our interviewee on how to break into equity research? You’re in luck.

Numi Advisory has advised over 400 clients by providing career coaching, mock interviews, and resume reviews for people seeking jobs in equity research and investment management. With extensive investment experience in equity research and private equity and now working as an analyst at a long/short equity hedge fund, Numi has unparalleled insights into the recruiting process and advancing on the job.

Numi customizes solutions to each client’s unique background and career aspirations, and teaches clients the most efficient and impactful methods to achieve successful results on their career search. He has helped place over 50 candidates in leading buy-side and sell-side jobs. For more information on career services and client testimonials, please contact numi.advisory@gmail.com, or visit Numi’s LinkedIn page.

Equity Research Interview Series:

About the Author

is the Founder of Mergers & Inquisitions and Breaking Into Wall Street. In his spare time, he enjoys learning obscure Excel functions, editing resumes, obsessing over TV shows, and traveling so much that he's forced to add additional pages to his passport on a regular basis.

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213 Comments to “Equity Research: A Day in the Life, Pay, and Exit Opportunities – Got Hedge Funds?”

Comments

  1. Fred says

    i didnt read the whole thing so if my question is right in the interview, i’m sorry.

    but is this the kind of job you can get out of undergrad? or would this be an exit opp from something else? and if it is an exit opp for something, what would be a good job to start with if i want to become one?

    • M&I - Nicole says

      Yes you can break into ER straight out of undergrad. Some move into ER after a stint in accounting, or corporate or even banking – it varies from case to case

        • M&I - Nicole says

          No not necessarily.

          You can move into IB, the buy side or even work for an O&G company you follow on their management team (perhaps as CFO etc). Quite a few exit opps!

          • Fred says

            awesome Nicole. thanks for getting back to me. if you get the job out of UG, will the pay, hours, and workload be the same as anyone else who is in the field?

          • M&I - Nicole says

            It really depends on your team and your firm. I’d speak to the interviewers and the firm and see what their expectations are.

          • Fred says

            and i forgot one question. you said some people start in accounting before doing this. im an accounting and finance student who plans to get involved in finance eventually. would a stint at a big 4 firm plus getting my CPA be better in the long run or should i just try to get in equity research right out of UG? and how do accountants get involved in ER? is it through networking?

            thanks!

          • M&I - Nicole says

            Would you like Accounting work though? If you do, go ahead. Otherwise, you might get bored. A CFA would be more useful if you want to do ER. Accounting experience is useful but you don’t need it so succeed in ER. If you want ER I’d just try applying directly for ER roles now

  2. Alex says

    How does an application for a equity research internship differ from an application for investment banking, as you have detailed on your website? Should we phrase/spin things in the same way? (i.e. should we still spin our experience and activities as initiating deals, increasing membership, being entrepreneurial, etc., or will that seem silly?)

    • says

      Yes, results (more money, save time/money) are still important but you want to focus more on your interest in the markets and how you went against mainstream views. So most of the IB tips apply, with those minor differences for ER. They like to think of themselves as “creative” so you have to play into that.

  3. confusedguy says

    Im sorry if this has been answered above but…

    1. Is ER traditionally under-marketed? At my (target) uni I never heard about it until I googled it and started to research it. If so, why?

    2. Are you more likely to climb your way up the ladder because a) you wont burnout so much b) your not competing with crazy clever people haha?

    3. Is the only advantage of IBD compared to ER the fact that you can get into PE with IBD but not an ER background? Can I still do an MBA at a top school/move into CF at a top company/go to a Hedge Fund/move into IBD/move into anything else pretty much with an ER background?

    4. In terms of ER prep – know a few stocks to buy/sell and why, buy/learn the fundamentals course from BIWS :) and know why ER? Is this it?

    Thanks!

    • M&I - Nicole says

      1. Not under-marketed but most people just want to get into IBD/M&A given the prestige
      2. Not necessarily – depends on your team and your skills
      3. Most PE funds do prefer candidates with IB background. With the above being said, yes – ER is a good training ground
      4. Focus on your passion in investing and demonstrate it

      • confusedguy says

        1. What prestige is associated with IBD/M&A – the fact that your name will go on a tombstone? Isn’t there prestige in getting your name on a report? (Maybe not as much?)
        2. You still need to excel right and be ‘the top’…? But is it somewhat easier because you have a work/life balance so can stay on ball?
        3. Apart from PE, ER will give the same exit opps as IBD?
        4. Okay.

          • confusedguy says

            Sorry one other question.

            Ive been researching ECM/DCM and it seems that if you are in ECM/DCM you don’t have real good exit opps so is it better to do ER vs ECM/DCM? Moving from ECM/DCM to M&A/industry group would be as hard right?

          • M&I - Nicole says

            If you’re in emerging markets, its ideal that you speak the local language for both division. In most firms, speaking the local language (i.e. Mandarin in China/HK) is a must for both divisions

        • M&I - Nicole says

          Prestige because M&A has always been “perceived” as the bread and butter of IB

          Yes if you want to work in an IB your excel skills should be stellar/at least good. This is a given.

          Different. Most people from ER usually go to the buy-side or even sales & trading. PE usually take people from IBD as I’ve mentioned in my previous comment

          • Steve says

            So agree, ER seems a good point to enter buy-side, but there is still big issue. Just in my case I’ve joined PE firm with focus on natural resources, so ER gave stellar modeling, research skills and knowledge about the industry, but the only issue here is lack of transaction skills (especially in drafting memos, purchasing agreements and so on), so at some moments i’ve found myself stuck with that, but as you do that once, there is no difference with my peers who had M&A experience before joining PE.

    • M&I - Nicole says

      It depends on your firm, your network & your luck. I don’t think its difficult because the skills are somewhat similar but you’ll need to find the right opening

      • Rohan says

        2 more questions
        Do you need to be a total stock market freak? I mean like totally into it.I foloow the stock market but im not drowned into it

        Do you need very good knowledge of derivative products?Like futures,options,swaps?

  4. JP says

    Hi

    I live in Sao Paulo and finish undergrad school this December. Currently I am doing an internship at McKinsey, but recently I’ve been realizing that I am actually more attracted to banking in spite of consulting – more specifically, Trading and Equity Research.

    That being said, could you please provide an opinion on the following points?

    – Do you think a two-year experience as a business analyst would be interesting to any of these careers?

    – What about an MBA degree? Would it probably make a big difference in my banking career? Is it common for investment banks to sponsor people?

    Thanks a lot!

  5. Joe says

    I’m an sophomore year student a target school in the US studying economics and applied mathematics.

    I was wondering how the economic research departments in banks (BB) compare in terms of the same criteria: pay, exit opps, hours, etc. Is it similar to equity research ?

    Thanks for your reply.

    • M&I - Nicole says

      I think it depends on the team, the firm and your level. I’d say so but the exit opportunities will probably be slightly different depending on which sector you cover.

      • Joe says

        A few details: My firm is a bulge bracket with a very renowned research department. The economic research team is pretty small, and the hierarchy is very flat.

        My understanding is that I will be conducting macroeconomic research on Latin American markets. It involves complex econometric modelling and forecasting (MATLAB) rather than financial modelling. I don’t really analyze companies or sectors, but rather economies as a whole.

        I’d appreciate any insight into this opportunity with regard to pay, exit opps, etc. So far most people I’ve spoken to don’t really know too much about economic research within investment banks. I’d also like to know if it would be possible to leverage this experience to enter IBD/Trading/PE/Hedge Funds (in case I don’t like the work) ?

        Thanks for your reply; sorry for the long query.

        • M&I - Nicole says

          I’d appreciate any insight into this opportunity with regard to pay, exit opps, etc. – Not quite sure re the pay but should be industry standards.

          I think this opportunity is good if you’re into economic research. Lucky that you’re working for a BB in their renowned research dept. Reputation matters & awesome that they have a flat hierarchy.

          So far most people I’ve spoken to don’t really know too much about economic research within investment banks. I’d also like to know if it would be possible to leverage this experience to enter IBD/Trading/PE/Hedge Funds (in case I don’t like the work) ? Yes

          • Joe says

            Thanks for all your help Nicole. One last question: How would I use/spin this experience to switch to different departments such as IBD/PE specifically ?

            Since it is mostly macroeconomic analysis, I don’t know how I could spin it in interviews, especially since it has nothing to do with companies. I guess I could spin it for FX and bond trading and hedge funds, but not sure how I’d do it for IBD/PE, where deal experience is more important.

            Thanks for your response.

          • M&I - Nicole says

            Yes tougher to spin macro research vs micro research to IBD/PE. Try to get as much company valuation experience as you can in ER

  6. David says

    Hi,

    Is a first year analyst position at credit rating agency a good step to get into Equity Research?

    Despite of the credit risk focus, I thought that sector and company research skills you get at a rating agency could be a positive on equity research positions. Do you agree? or better search other roles?

    Thank you.

    • M&I - Nicole says

      Maybe – depends on what type of work you do in the credit rating agency. You can spin it
      Yes it does help.
      Getting a CFA will help if you want to break into ER

  7. Omar says

    Hi,

    I am considering a career change to ER. I have an MBA and I am working on a masters in Applied Statistics. My background is in Data management for a pharmaceutical company. Is there’s place for graduate level statisticians in ER? I am considering this field because of my experience and knowledge in the area of modeling, data analysis, research and interpretation.

    • M&I - Nicole says

      Yes perhaps you may want to check out quant research roles. I believe strategy research teams in banks also like candidates with your experience. When I was interning at a bulge bracket’s strategy(equity research) team, these skills were crucial to my “survival” there because I had to build various databases from scratch (quite different from that in other ER departments) and the level of data analysis skills required was high

  8. Steve says

    Brian – What’s your take on GS Salt Lake City’s entry-level ER role? It’s a 2-year program and people are moved to NYC / other BRICs location. Analysts works on model a lot and have lots of exposures to folks in NYC.

    • says

      I don’t have firsthand experience with it so can’t comment directly – but if you get good work experience it sounds like a good opportunity. The main downside is that networking will be almost impossible because few firms are based in Utah.

  9. Moksh says

    Hi!!

    I wanted to know for what are the chances to move from Equity Research to Investment Banking? Also, if I decide in say two years time to move on to a different country (Home country), do I stand a chance to get into IB there? How is the experience in USA considered when I move back to my home country?

    • says

      It’s possible, but harder than IB to ER because you need to learn additional skills such as M&A and LBO models.

      Experience in the US is a positive in most emerging markets, so you have a better chance of getting into IB if you make that type of move.

  10. Jay says

    Question to Nicole here – I was wondering if you were ever thinking of doing a post on your experience in strategy research?

    • M&I - Nicole says

      Jeff, thanks for your question. I haven’t thought of the above. I think it is a fantastic suggestion, and will keep that in mind. Let us know if you have other questions on strategy research in the meantime!

  11. BigMac says

    Hi – I have an upcoming interview within the in-house equity research department of one of the large fund managers. Just wondering if you have any material specific to acing equity research interviews which may give me the edge. Specific emphasis on company valuations and other analytical aspects that I should sharpen before hand.
    Cheers.

    • M&I - Nicole says

      I may be wrong, but I don’t believe so because the skill sets are slightly different. While both require solid analytical skills, I believe ER is still a lot more qualitative (require solid communication skills) vs. equity derivatives trading (require strong quant skills & ability to make calls/think on your feet)

  12. Deepak Pradhan says

    Read the articles. Appreciate its educating nature. Would like to get regular inputs. Thanks

  13. Sean says

    Thanks for the great article.

    In the comments below, you mentioned that it is possible to break into ER from an accounting, corporate, or similar experience. How about from commercial banking? Seeing as CB is focused on financial analysis and company research (just from the perspective of a lender) is it a transition that can be made?

  14. Gavin says

    Hi
    I am a 37 year old with 14 years experience in Hedge Fund administration. I am also a CFA Charterholder since 2010 with particular interest in pursuing a change of direction in my career, most notably towards the area of Equity Research Analysis. This was an area of the CFA program I most excelled. How difficult is it to make this switch given my age profile and experience in a different area of finance. Would any prospective employers see this as a notable disadvantage? Any advise you can give would be much appreciated.
    Thanks

    • M&I - Nicole says

      Yes it can be harder to make the switch at your age, especially since you may not necessarily have the network of institutional investors and valuation experience that other ER analysts have built up over time. The best path maybe to move to a division like prime brokerage and then progress to a HF doing research work. You may find this link useful: http://www.mergersandinquisitions.com/hedge-fund-recruiting/

    • M&I - Nicole says

      Good question. Slightly, but it is still part of IB and many people have been laid off in the area given the crisis so I don’t think it’s that stable. And to some firms, its still not exactly a revenue generating center.

  15. al says

    what are your thoughts on independent equity research shops? in terms of prestige, how do they compare against research roles at mid-market shops like piper jaffray?

    • M&I - Nicole says

      Prestige-wise, banks, I believe, may have better reputation. However, independent research jobs are great route for you to hone your valuation skills

  16. Chris H says

    If equity research is something I want to do out of college, what would be a logical goal for my sophomore summer? While the big mutual funds are in Boston, etc. are there any internships that would make sense in New York? Thanks!

    • M&I - Nicole says

      Sophomore summer isn’t terribly important so if you want to have fun, study abroad, I’d do that because junior year is the most important summer. However, if you want to get a head start, I’d suggest you to intern for asset management companies/funds/or even independent equity research firms. You may have to cold call/network with quite a lot of people to find such roles in NY.

  17. anonymous says

    Hi,

    I have recently joined a job in equity research in NYC. I am working from 7am – 7pm on an average day, with almost no time for networking.

    1. Are the hours usual for equity research in NYC (I work for a boutique investment bank).
    2. Since my hours are long, what are some ways I can network so as to help my case when I want to move to a hedge fund in a couple of years?

    Thanks!

    • M&I - Nicole says

      1. Yes I believe they’re the norm
      2. Go to events/drinks or HF conferences after work (yes this will take time); try to limit your drinking so you can get up on time for work the next day. Try your best to meet HF managers and contacts through your role in research by talking to more investors (if possible), attending investor meetings (yes try your best to tag along with your seniors or other divisions); networking through work is the best way. Of course you still need to spend some time so maybe 3-4 hours a week? You may also want to hang out where most HF peeps chill in NY over the weekend and meet them that way

  18. Vijay says

    Hello I’m from India and I’ve secured a job as an equity and fixed incomes research analyst in Nomura. While I like the job role I’m also unsure if the work aligns with my long-term goals. In the future I want to do a Top MBA in the USA and get into either General Management and Strategy or Corporate finance in a big corporate like GE. I’d like to know if this job will help me or prepare me in any way to pursue my long-term goal.

  19. Patrick says

    Hi – I am in my mid-30’s and have spent most of my career in corporate accounting, within a well regarded children’s hospital. I have an MBA from a good school, but not top tier. I would like to switch careers to become a ER analyst. I have a few specific questions below for you.

    1.) What can I do to make myself more appealing to employers? and give me the ability to compete with students fresh out of undergrad or graduate school?

    2.) One major concern is salary. Being mid-career I want to figure out how large of a pay cut I would be taking. Would you know generally how much a ER associate / analyst in the Philadelphia area would make?

    3.) How big of a hurdle is my age and experience in a different discipline? Do you know others that have over come similar circumstances?

    This site has been a great resource for me. Thanks!

    • M&I - Nicole says

      1. This is a tough one to comment on on this forum, but I’d say networking would give you the edge. However, since you don’t have the relevant experience, it can still be challenging to break into, especially if employers have this concept that fresh grads are willing to work harder
      2. I would not worry about pay cut if you want to make the switch. Make the switch sooner rather than later if this is what you want. I don’t have the stats so I can’t answer this question.
      3. I don’t know of others who are in similar shoes that have broken into ER. Instead of focusing on your age/experience, I’d focus on networking with buy-side firms and banks in the area and emphasise your strengths such as your accounting experience etc

      Good luck!

  20. ray says

    I’ve working as RE in a brokerage for 6 month but I failed in CFA 1 and FRM 1 exam. But I’ve passed series 7. Is there possibility for me to move into investment management as a RE?

  21. Karan Uppal says

    Hey
    I am from India. I have done my MBA from Institute of Management Nirma University.
    I recently joined an Equity Research Firm as an Associate. I want to ask you whether adding one more qualification i.e. CFA along with my current job would help me to progress in my career??
    Also, what are the opportunities provided to an Indian Equity Research Associate/Analyst to switch to US Investment Banks and Equity Research Companies.
    @Nicole Please Reply

    • M&I - Nicole says

      Yes a CFA can help.

      I can’t say for US opportunities in India so I’d suggest you to contact the bulge brackets over there for opportunities. In terms of moving to US, this can be challenging since you don’t have a visa. It maybe best to move to an international firm in India and move internally

  22. angelo says

    Hi Nicole,

    Appreciate that you’ve been answering all question here so diligently! I come from a bit of a different background and maybe have a bit of a different aim compared to other people here so far.

    I am working for a top BB’s leveraged finance team in london but want to move to something closer involved with markets. I’m not so much thinking about equity research but rather credit research within my bank as it suits my background and personal interest a lot more. Do you have any insights into this area? I guess it’s in most ways quite similar and my bank is from what I know also quite well regarded in the field, however I’m wondering how it compares to ER in terms of reputation, exit opps, pay, hours etc? Thanks!

    • M&I - Nicole says

      Thanks for your compliment!

      Great questions. Yes equity and credit are different – I believe credit could be more technical and more macro-driven. In terms of pay/hours, I think it’d be similar but I believe it depends on the bank and group. I believe credit research can be path way for you to move into special situations and distressed hedge funds.

  23. angelo says

    Thanks, perhaps true to some extent re technical which is also why I’m more interested in that area. It’s actually very difficult to find any information on credit research online whatsoever..maybe an idea for your next M&I interview?

    Two other questions that I never got a straight answer: first, equities trading is a bit of a “nobody cares” business at my bank to be quite honest, nonetheless the ER department is quite big. Margins in equities trading are virtually zero anyways and I never understood the research – revenue link..only because I give investors nice ideas to trade on, why should they execute with my bank and not somewhere else? At the end of the day price is key in this business for the buyside and I even know of firms where basically PMs just pass on trading orders to their executions desks which look at nothing else than the price they get. This is one of the reasons why credit also looks a bit more interesting to me or would you disagree?

    Second, given the size of my institution, I never understood how independent research can really throw around their views? So the classic situation would be having a massive mandate for a client in IBD but research thinking about publishing a very negative note on the company. How does that usually work out? I know very hard to answer, but I imagine that must be one of the more frustrating aspects of the job (as the IBD fees would force you to shut up).

    Thanks!

    • M&I - Nicole says

      Thanks for the idea.

      Re. equity research – useful to build up franchise of bank and help with other aspects of the bank’s business. I don’t have much to comment on equities trading/credit.

      ” I never understood how independent research can really throw around their views?” What don’t you understand about?

  24. equity_researcher says

    I have recently started working in equity research at a boutique bank. As expected, the hours are fairly long, from 7am-7pm on average.

    My colleagues in office often discuss their personal investments, though I wonder how they get the time to make investment decisions – I mean, when we do our ER work, we develop detailed 3-statement models, speak with IR etc. and THEN make a buy/sell/neutral recommendation, but how do people make decisions regarding their personal investments? Do they develop their own models for companies they want to invest in? Or do they simply look at a couple of metrics (eg. comp for retail companies) and make their decisions?

    Any opinions would be much appreciated. Thanks!

    • M&I - Nicole says

      Many people in ER have their own investments outside of the sector they cover. Some of them just love investments and they use what they learn at work to invest. They may invest over the holiday/weekends and/or after work. I’m sure some develop their own models and have their own couple of metrics to make decisions. For retail companies, they’d probably look at P/E, P/S, financial statements, SSS growth etc.

  25. Helen says

    Hi Nicole,

    I came across M&I a while ago and have always found the comment section incredibly helpful – thanks for your input!

    I have a “next-step” question: I just graduated from a target school in June with an Economics degree but a bad GPA (3.1), and have recently thought of breaking into finance because I prefer a more dynamic and energetic environment than my current nonprofit fundraising position. I’m extremely into writing and research, which I’ve done in college for an advanced economics elective (not in finance though) as well as other liberal arts classes, and so ER is a top choice.

    The problem is, I have zero finance experience except for two nonprofit fundraising internships in which I created models to improve processes and made operational recommendations. I also have not really followed the markets either. No matter how I bankify my resume it’s just plainly … a nonprofit resume; I also don’t have anything lined up for now. Should I just grab anything related to finance(6-month/1-year contract work, even unpaid internships) just to show that I have some finance experience, and also start doing some personal investing? Also networking like a ninja as some of the interviewees did? What sort of positions I should get at the moment to break into ER?

    Sorry for the long message, and thanks so much for your time!

    P.S. I’m heading back to Hong Kong probably in September when my nonprofit internship here in the States is over. I don’t have work authorization.

    • Helen says

      Hi Nicole – I’ve just got an email from M&I about networking the last minute; I think the tips there pretty much summed up everything I need to do now. I’ve looking forward to digging into both the Interview & Networking toolkit I just ordered. Thanks!

      • M&I - Nicole says

        Helen thanks for your support and feedback. Please let us know if you have other questions/comments. Look forward to seeing you in BIWS forum.

  26. SB says

    Thanks Nicole – great interview.

    Tangential question – I have a Masters in OR and Analytics/Data Science – started working in Retail Analytics (yes, Retail !) Want to move to a more data intensive industry and have always been curious about ER and Hedge Funds.

    Is there a place for people with my skills in ER/Hedge Funds ?

    • M&I - Nicole says

      Yes, probably back office on buy-side. In terms of front office roles, perhaps more database intensive/analytical roles but it can be challenging without previous markets experience.

  27. JonathanSC says

    Hi M&I, I am trying to figure out the best possible route to break into PE from ER. I cover the tech industry and have been at my current firm for about a year and half. During that time I have been exposed to deals (which our firm were lead managers for) doing all the due diligence, modeling, and pre-IPO stuff prior to initiating coverage, also initiated coverage on other public companies, and have made several contacts within the industry at the management level. What would my best strategy be? What would be my chances? Will I still carry my position with a graduate degree under my belt?

    Thank you in advance.

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