by Brian DeChesare Comments (30)

How to Make a Career Change into Equity Research: The Best Path for Older Candidates?

Career Change Into Equity Research

If you’ve missed the all-important investment banking analyst experience but you still want to work in finance, what do you do?

Go to business school?

Join a Big 4 Firm?

Go to a PE or VC portfolio company and try to move in from there?

We’ve covered options for older candidates before, but an oft-overlooked one is equity research.

If you have the right skills, it may be far easier to move into research as an experienced candidate than it is to get into investment banking or private equity.

That’s because equity research teams aren’t necessarily looking for one specific profile.

Our reader today moved into the industry with an extremely random background – sales, corporate finance, investor relations, and consulting.

But that also gave him many advantages, such as knowledge of the industry he’s covering in research, and the ability to say that research was his plan all along.

Among other points, we cover:

  • How to spin your background into sounding focused on a specific industry, even if it was completely random.
  • What equity research teams are looking for, and why you might stand a better chance if you have more full-time work experience.
  • What to expect in interviews at elite boutiques, bulge brackets, and smaller firms.
  • And the future of the industry, given that equity research is undergoing some big changes (as of 2016).

From Random to Research: The Short Version

Q: Can you summarize your story for us?

A: Sure. I went to a non-target university and did a few finance internships, including one at a hedge fund.

Then I moved into sales at a Fortune 500 technology company, used that to transition into investor relations, and did well in IR at first.

But about 6 months into the job, I got a terrible boss who wanted to nit-pick the smallest, most insignificant details, and I started disliking the stuffy corporate environment intensely.

I started networking around and went back to a Big 4 firm that I had spoken with before I took the IR role, and I won an offer in their management consulting team.

They had the impression that since I had worked at a tech company, I was a technical expert in the software and services they implemented for clients (oops!).

But I barely received any work when I started working there, and client engagements dropped by a huge amount, so I was let go. Amazingly, it took them about 8 months.

I networked around some more, and 6 days before my rent was due, I got a phone call from a contact in equity research at a boutique firm.

They needed an Associate, and I needed a paycheck.

I did well in the interviews, won an offer, and then got completely crushed with work for the first 2 months because I had to initiate coverage on 23 companies (!!).

A few months later, the entire firm shut down and started letting people go.

So I interviewed around yet again and won another equity research offer at a European/Asian bank that wanted to expand its presence in the U.S.

I’m the only Associate on the team, and our Analyst is well-respected, with the top hedge funds frequently calling on him for his views on companies.

Q: That’s quite a ride.

So let’s talk about investor relations first – do you think the culture there is generally “stuffy”? Or was it just because you were at a Fortune 500 company?

A: It was because 1) It was a mature, late-stage company, and 2) I hadn’t had real finance experience before joining the team.

Younger tech companies, like Facebook, offer a very different experience because they’re still building their brands among institutional investors, so it’s more about finding growth opportunities and less about reacting to events.

With that said, in IR you are always trying to please multiple constituencies, so there may be more room for politics and mismanagement than in other groups.

Why Equity Research?

Q: OK. So after you left IR and after the consulting gig turned into a disappointment, why did you decide to pursue equity research?

A: I looked at investment banking roles as well, but I felt I was too old for IB and didn’t want to work the hours.

And I had no real investment track record for buy-side roles, so they were also out.

I liked equity research for a few reasons:

  • Analysts and Associates are constantly leaving and moving around, and recruiting can be more “off-cycle” than it is in IB.
  • You just have to make one person happy in interviews: The Analyst. And you have a better chance of persuading one person to like you than 5-10 people.
  • It’s easier to join a growing team in research because teams are smaller and there are more chances to become the second person on a new team.
  • I could make most of my previous work experience sound relevant to ER, but it was a stretch to do that for IB roles.

Q: OK. So how did you explain your very random background to research teams?

A: I said, “It was my plan all along, but I didn’t attend a target school, so I had to move in through the side door.”

I explained that I had always been researching stocks, going back to university, but I didn’t go to a school with a presence on Wall Street (because of a specific academic program I wanted to experience), so I had to find another way in.

So I used sales to work my way into a finance-oriented role that involved analyzing companies and talking to investors: Investor Relations.

And then I took the consulting role because I wanted a more granular view of companies, which is essential in research.

I was honest about why I was let go – the downturn in clients and my skills not being what they wanted – and spun the few projects I worked on into sounding like the majority of my time there.

Q: But I’m assuming that people objected by asking why you didn’t move from investor relations directly into research.

A: Yes! And I answered it by saying that to succeed in research, you have to understand not just financials and how investors think about companies, but also how the business models work at a deep level.

And you can do that only by gaining operational experience and understanding the challenges companies go through.

Some people were still skeptical since I had bounced around so much, and this story didn’t work quite as well at elite boutiques and bulge brackets.

Q: But is that what they’re looking for from experienced candidates?

Do research teams care about operational experience at all?

A: The best summary I ever heard was from a Research Director:

“To succeed in equity research, you need a mind like an accountant, the stamina of an athlete, and the mentality of an entrepreneur.”

Stamina is critical because there will be long hours and plenty of grunt work, and acting like an entrepreneur is also critical because you have to publish quickly, get your name out there, and build a reputation.

But different pieces of that description are important at different shops.

At some places, Associates are effectively accountants and focus on data entry and updating models rather than coming up with new ideas.

But at other firms, they’re more macro-focused or relationship-focused.

It comes down to how your Analyst operates: Mine is very relationship-focused and has good ties with management, so he’s on the phone with them all day.

But I’m slower, more methodical, and I like the analytical side more, so I’m a perfect complement to him.

Analysts hire Associates to amplify their game or to compensate for their shortcomings.

To figure out which one your Analyst wants, ask him/her what he/she likes and dislikes most about the job, and pitch yourself as someone who can handle the “disliked” parts the best.

Q: So I guess there’s little consistency in the backgrounds of people who join research teams.

A: Yeah, pretty much. Few people come into ER from IB or IR backgrounds, so I’m a bit of a special case.

Other than that, some have come from corporate finance at normal companies, some are from Big 4 firms, others have come into research straight out of undergrad or MBA programs, and others have even come from data providers like Thomson or FactSet.

The Director at my old firm wanted hard-working people and didn’t care much about their stage of life, degree, etc. He brought in a mix of older and younger candidates, and he hired me partially because of my social skills.

Those skills came from a ton of networking over the years and from breaking into finance from a very unconventional background.

Interviews and Case Studies

Q: So we’ve talked about your story and why ER is potentially a good area for career changers, but what about interviews themselves?

What did you experience?

A: At my first firm, everything was fit-focused. Ninety percent of the questions were some variation of “Why ER?” or “Why did you do Job X before coming here?” or “Are you really sure you want to do ER?”

To prove my interest, I brought in my finance reading list, which immediately made me stand out.

When I started interviewing at other firms, I encountered more case studies at elite boutiques and bulge brackets. They were less common at middle-market firms and European/Asian banks.

The typical case study consisted of a 3-statement modeling test where they sent me a partially complete model for a company in the group’s industry and asked me to finish it.

I was well-prepared from your courses and guides, so nothing caught me off-guard.

Outside the case studies, the questions at the EBs and BBs were still not super-technical.

They did ask a few accounting and valuation questions, but they focused more on my motivation for doing ER, what I thought of different companies, and my stock pitches.

The Future of the Industry

Q: So what do you think of equity research so far?

A: I like it quite a bit – both in my old role and my new one at my current firm.

It’s the first time in years when I’m not just looking for my next thing.

The only part I don’t like is having to be at my desk at 7 AM on weekdays so we can respond to news ASAP.

Other than that, my boss is very loyal, and I could see myself eventually starting a boutique firm with him. I wouldn’t mind moving to a buy-side role eventually, but I would need to mature as a thinker and start covering more stocks independently first.

Q: You’ve made equity research sound very appealing, but isn’t the industry shrinking (as of 2016)?

The whole business model is changing since investors will have to pay for individual reports rather than getting them for free as trading clients.

Doesn’t that make the industry less appealing?

A: The industry is shrinking, but buy-side firms and asset managers are also shrinking.

And those firms are starting to pay a lot more attention to individual Research Analysts to see who’s facilitating profitable trades.

Even though the regulations are changing, I don’t think the industry itself will go away.

Buy-side firms still like to absorb every last detail about companies before they make investment decisions, and a good research team is yet another resource for them.

Good research teams still add value because you pick up very different things from speaking with management in-person and on the phone than you do in investor calls and other reports.

And the better the relationship the Analyst has with management, the more signals he’ll pick up on and use in his recommendations.

Also, the big banks are likely to be harder hit by these regulations and industry changes.

Smaller firms, like elite boutiques, have always survived on the strength of Analysts’ reputations and their creative ideas.

Q: Thanks for explaining that.

Is there anything else you’d add that we haven’t already covered?

A: Don’t underestimate the social barrier to entry.

While the industry has become more diverse, if you’re not from a wealthy/prestigious background, you will not be used to interacting with people who are.

So when you’re first networking for these roles, spend a lot of time just observing what professionals talk about and the vocabulary they use.

And then try to imitate that so you start being seen as “one of them.” It’s easier said than done, but you can always extend your recruiting time frame if you can’t do this right away.

Q: Great. Thanks for your time.

A: I’m happy to help.

M&I - Brian

About the Author

Brian DeChesare is the Founder of Mergers & Inquisitions and Breaking Into Wall Street. In his spare time, he enjoys memorizing obscure Excel functions, editing resumes, obsessing over TV shows, traveling like a drug dealer, and defeating Sauron.

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  1. Avatar
    Parantap Bhu

    Hey Brian,
    Great article!!. I am actually a data scientist/data analyst with 3 years of experience. Through the course of undergraduate and professional journey, I have developed an interest in investing. I have completed a lot of online courses in accounting, financial markets and financial modeling.
    I am also managing my family’s portfolio since last 2 years and have found the entire process of researching and shortlisting stocks/ other investment products really fulfilling. I am planning to switch over to an investment analyst/research role. Currently looking at MSc courses in UK / USA to pivot into investment based career, preferably in UK or USA. Also , planning to give CFA-1 before i start the course. Couple of questions:
    1. For eventually getting a role as an investment analyst, is equity research a good entry-point or will it be more feasible to directly enter investment management?
    2. Although I can identify a few transferable skills such as analytical mindset, ability to work with data, technical tools such as Excel, Python, research inclination, etc, will my background benefit me ?
    3. Lastly, while exploring different companies, I came across graduate training programs that lead to full-time opportunities. Is this a good way to enter the industry ?

    Thanks in advance.

    1. 1) They’re similar, but ER probably has more entry-level roles and higher turnover.

      2) Yes, but maybe not as much as you think because investing requires more intuition and less “science.”

      3) Potentially, yes, but to maximize your chances, you need internships before/during the Master’s program.

  2. Hi Brian,

    Thanks for sharing this article.
    I have cleared my FRM level 2 and I am currently working with Financial services firm which is into selling risk and portfolio analytics tools to various asset owners, insurance firms, pensions fund owners etc.We help clients with onboarding of these tools and how are analytics work.
    Any insight on how to get into credit research field from the current role or if you can refer some article which has already covered skill set, work type and questions asked and exit opportunities etc.


    1. Sorry, I don’t know enough about risk management careers to give you an answer on that one. Maybe ask on the Bionic Turtle forum and see if someone there can point you in the right direction.

  3. Hi,

    I am an MBA graduate in India currently working with one of the Big 4s in their ERP (Enterprise Resource Planning) implementation consulting. I want to make a switch into finance: equities, investments or risk. I currently have an offer for ESG research (Equity Strategy) from a large bank. But given the current regulations and budget cuts in equity research, I am very apprehensive to move onto this role. However, I am also finding erp consulting very dull and want to move out as soon as possible. What would you suggest I do?

    1. Move to equity research and then start looking into other options after you start there.

  4. Hello Brian,

    I am currently working full-time as a mechanical engineer and attending a top 25 MBA program part-time. I’m roughly half-way through, with 2 years left to complete the coursework. I have declared a finance specialization, and will be taking as many finance electives as possible before I graduate.Also, I have begun studying for the CFA Level I, which I will take in June of 2018. I am particularly interested in landing a job in one of the top-tier investment bank as an Equity Research Analyst or Investment Banker.

    Do you have any advice on how to increase my desirability to a top-tier employer? Also, I will have the ability to use my partner’s income to pay the bills should I need to take an internship at a reduced salary – which I assume I would pursue in my final year in the MBA program.

    I appreciate your help.

    1. You really need internships or some prior work experience to have a good chance these days. So yes, you probably need to get something at a local research/investment firm or local bank or something like that and work for reduced pay for a while. At the MBA level, it is tough to just move in from a completely unrelated field even at a top school.

  5. Hi Brian,
    I have just completed my MSc in Investment and Finance, and prior to that I worked as an auditor at Big 4 for 2 years, and then worked as a construction steel exporter for 5 years. My exposure in financial statement analysis, construction industry, and high interest in investments tempts me to work in equity research. What path do you think I should take to get into the industry? Should I concentrate on applying equity research roles? (I’m in my early 30s)

    1. That would be one option, yes, but I’m not sure if that’s the easiest one with your background. It might be better to go for some type of valuation role and then corporate development at a normal company if you want to work on deals. Or if you want to pursue a public markets role, maybe focus on asset management firms, as it’s sometimes easier to get into those than ER teams. There are some other ideas here:

  6. Hi Brian, I’ve posted here a couple other times and thanks for the replies I always get and all the work you do here! Like I’ve said before I’m coming close to my mid 30s now and have been in semiconductor engineering for the last 6 years (masters in electrical engineering from Arizona state) and recently completed a masters in finance from harvard extension school. Been looking close to 2.5 months and have not had a single interview yet so I’ve been casting a wide net for positions I can go into. My reasoning is that its harder to break into financial services and then it will be easier to network once I’m in. So I’ve been applying to equity research at BS and SS firms, risk management and portfolio analytics. I’ve contacted lots of people on LinkedIn and many want to help but there have not been opportunities yet.
    My question for you this time around: Is it easier to join ER in SS firms in your 30s compared to IB roles? I read your articles and I think I should focus on ER in SS firms maybe not focus on BB so much but rather IBABs UCEBs and MMs. Will these type of firms have an ER presence in the first place? And where can I find a list of industry specific investment and advisory banks? I would be interested in the technology specific bank.

  7. Hi Brian,

    Great article and by far the best site with good insights and advice. I am currently working in the FMCG industry with almost 5 years of supply chain experience with exposure in different departments in the global, regional and local teams. However i see myself more aligned to investment finance and would like to turn the interest/ hobby into a full time job. With a chemical engineering background and the past FMCG working experience, i see that breaking into ER would be ‘easier’ in the space of investment related roles. However i do not have a MBA, Masters of Finance or CFA to boast of.

    Hence can i get your advise if i should pursue any professional studies to move into this industry and if there are other roles which would enable me to break into investment finance?

    Thank you!

    1. It would be very tough to move in directly with your background. Maybe consider an MSF or an MBA, do an internship during one of them, and use that to move in.

  8. Hi Brian,
    I am a 42 year old ship sale & purchase broker and would like to capitalise on this expereince to get into maritime finance and investment banking.
    Please suggest how to break into those domains.
    Or do you think getting an MBA would be prudent at this juncture?If so, please advise schools that have strong network with maritime/oil & gas industries(apart from Mccombs and TAMU Mays).
    Many thanks in advance.

  9. Hi Brian,
    I am in my late 20’s, graduated last year and am currently working as a credit analyst at a tech corporation for the last 10 months. I would like to pursue as an analyst in a PE/IB. I am aware it is very competitive and the jobs come with their own downsides.
    Still In your opinion, what options do you think I can pursue where I could spin my current experience? Thanks.

    1. The best bet would be to aim for corporate banking or maybe a credit-related PE fund since your skill set would be more relevant there. Maybe think about DCM or LevFin at a bank as well, but your chances are probably higher in corporate banking roles.

  10. What are the finance reading list?

    1. I’m curious as well.

    2. It was just a list of finance-related books that he found helpful. The list might include books on accounting, financial statement analysis, valuation, and so on, and it would probably be a mix of older / “classic” books such as The Intelligent Investor and newer books as well.

  11. Hi Brian,
    Great article again!
    I wanted to ask slightly off topic question. I got an offer for a summer internship at a small PE firm (less than 15 employees). I am from non-target uni but on track for first class. Should I accept the offer or keep applying to other firms such as Cowen, Allianz, Aberdeen Asset Management or Oppenheimer. Thank you.

    1. And also, would this internship make it a lot easier (since it is PE) for me to land and internship at bulge bracket/boutiques next year when I will be a penultimate student?

      1. I wouldn’t say “a lot easier,” because these days, previous internships are a requirement to win summer internships at larger banks. But yes, you would have an easier time recruiting with a PE internship than you would without one.

    2. I think it depends on where you are in school. If you’re in your first or second year, definitely accept this offer. If you’re in your third year and it’s therefore critical to win a return offer, hold out for an IB offer. But it sounds like you are not in your third year yet.

  12. Hi Brian,

    Since graduating in 2014, I’ve worked in a few lower-level roles in consulting: internal operations consulting at a state government agency, analyst at a compensation consulting boutique, market research for a small strategy consulting firm, and finally some tax consulting.

    I plan on doing the CFA, crafting original research reports, and networking until I land something – even a pre-MBA internship if I need to go back to school to really make ER happen. My resume looks good, but in truth I’ve been bouncing around a lot and I just wanted to get any insight to the path there…

    1. Potentially, yes, you might need an MBA to get into equity research with that background. One issue is that most of your experience was more related to consulting or tax work than finance, so it’s not quite as relevant as investor relations/corporate finance. I would recommend trying to win a valuation/TAS offer at a Big 4 firm or at an independent valuation firm, or maybe a corporate finance offer at a normal company, and moving in from that first. If that doesn’t work, then consider business school.

  13. This person is clearly my professional twin.

  14. Somewhat unrelated to the article, but loving the new site layout bro.

    1. Thanks! Glad to hear it.

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