by Brian DeChesare Comments (6)

How to Move from Compliance to an Equity Research Internship: Internal Mobility 101

Compliance to Equity ResearchCan you escape from the middle or back office?

It’s tough.

There are some success stories from readers, but it’s unquestionably difficult.

On the other hand, it’s easier when you’re moving from a middle or back-office internship to another group.

Our reader today made this move, and managed to turn a year-long compliance internship into an equity research one instead – midway through the internship.

Here’s his story, and how you might do the same:

Escaping from Law into Compliance

Q: Can you give us a quick overview of your background and the process you followed to move from compliance to equity research?

A: Sure. I did dual degrees in Law and Accounting because I was unsure if I wanted to do law or finance.

Then, in the middle of university, I took a gap year to work in a compliance role since it intersected with both finance and law.

I went through the interview process at a large bank and accepted an offer for a year-long internship in compliance.

During the internship, I decided to apply for equity research positions at the same bank, and I networked my way into an offer there.

Q: I can see why you wouldn’t want to do law, but what made you interested in equity research?

A: I had applied for investment banking and equity research internships at the same bank in my first year at university, but I didn’t win offers back then – partially because the bank cancelled its hiring plans for a few positions.

So I had an interest in the public markets going back at least a few years, but the compliance internship cemented it for me.

I gained some good exposure because I was part of a regional team that did work all around the world, but the regulations, policies, and other rules became quite tedious.

You spend a lot of time on tasks such as writing disclosures for reports and publications, but it’s a lot more interesting to write the actual reports or recommendations.

Equity research in Asia is very promising because of the growth of the Hong Kong and Shanghai stock exchanges and the need for research analysts to cover local companies there.

So I started applying for equity research roles after about six months of my compliance internship.

Q: And what steps did you follow? I assume you had to network extensively to do this.

A: I did two simple things to start the process:

  1. I reached out to my boss directly and asked about equity research positions at the firm. He then referred me to a few people in the group.
  1. I also reached out to the equity research team members I interviewed with a few years ago, even though I didn’t win an offer back then.

I just said, “I’m [Name], I interviewed with your group in [Date Range], and now I’m working here in compliance. I’m very interested in equity research positions, and I’m reaching out to see if you have any advice on transitioning.”

I always started by asking for advice, and they usually came back to me with referrals to others in the group.

Note that this mostly worked because I did fairly well in those earlier interviews, despite not receiving an offer.

Q: I can understand the second point, but most people would say it’s crazy to ask your boss about leaving the team and moving to a different role.

A: It might be a different story if you did that in a full-time position… but I don’t think it was that crazy because:

  1. I established myself first – I only started applying for other roles after about six months of this internship. So they knew I could do the work reliably, and they wanted me to stay at the firm rather than leaving altogether.
  1. I was upfront – A lot of people shoot themselves in the foot by trying to “hide” internal transfers. And then when your boss finds out, inevitably he or she will be annoyed with you. I told them what I was doing right away.
  1. I completed the majority of the year-long internship – Although I left in month #9, I still finished most of the internship. I told them in the beginning, “I realize you want me to stay, and I fully intend to complete the internship. But depending on the group’s hiring needs, I may have to transfer earlier than expected.”

So this strategy would not work for, say, a 3-month summer internship.

But if you’re in a region that offers longer-term internships (e.g., parts of Asia, Mexico, parts of Europe), you might be able to follow this plan.

Q: Right. So what was the actual interview process like?

A: Neither I nor anyone else who applied for equity research roles heard anything for the first two months.

When I didn’t hear anything, I followed up with HR once every week or two in that 2-month time frame because I didn’t want to bother Associates or Analysts in the group.

Then, in month #3 they finally called me and conducted first-round, second-round, and final-round interviews very close to each other.

I spoke with everyone on the team, completed a few case study exercises, and answered a lot of markets-based questions.

Equity Research Internship Interviews

Q: So what were the biggest challenges in interviews?

I assume they questioned your rationale for switching over from compliance.

A: No, not really. The “Why equity research?” question came up repeatedly, but they never explicitly asked why I wanted to leave compliance.

But I’m sure it would have come up if I had been leaving a full-time role.

For me, the biggest challenges were:

  1. I was working and studying at the same time as I was preparing for interviews, so I had little free time to research stocks, create stock pitches, etc.
  1. They asked a lot of markets-based questions on regions outside Asia. There were questions about economic policies in the EU, how the US markets were performing, and more – which I did not expect based on prior articles on this site.

Q: So you need to know global markets, even for equity research in Hong Kong where you mostly follow Chinese companies.

How did you answer the “Why equity research?” question?

A: I said:

“I’ve always enjoyed following the markets and analyzing which companies might outperform or underperform, and, as you know, I’ve had a long-term interest since I applied for research roles here a few years ago.

Since I have a legal and compliance background, I can also find information efficiently in different sources, which is a critical skill in equity research.

And finally, the longer you stay in equity research the more valuable you become as you develop relationships with companies and institutional investors. That aspect appeals to me because I want to make a long-term career out of it.”

Maybe I should have mentioned particular companies I followed, but they seemed to buy into my story.

Q: I think that’s a reasonable answer for an undergraduate-level internship interview, but, as you said, it would have been better to mention something more specific to ER.

Can you describe the case studies and technical questions you received?

A: The technical questions all came within the context of the case studies, so I’ll just describe those.

In the first case study, they gave me about 20 pages of information on a company, including its financial statements, recent press releases, and details of its strategy and business segments.

Then they asked me to make a presentation with a SWOT (Strength, Weaknesses, Opportunities, and Threats) analysis and a recommendation for the long-term and short-term operational strategies the company should pursue.

There were no real calculations in that case study, so it was more of a communication/presentation test.

I had only 30 minutes to prepare, but no calculations were required so it wasn’t that difficult.

The hardest part was the Q&A afterward. They turned to specific pages in the documents and asked me about the company’s supply and unit sales figures, and also why management claimed higher demand than supply in a few years.

I didn’t have a great answer for that one, but I suggested that it might be a supply-chain constraint or possibly pent-up demand from another manufacturer’s production shortfall.

Q: And what about the other case studies?

A: They also had me pitch a Hong Kong stock at one point.

I don’t have much to add beyond the structure you’ve recommended before: recommendation, short background on the company, personal experience or channel checks you’ve done, and then why the stock is mispriced, what it’s really worth, and how soon it could get there if specific catalysts transpire.

I aimed for 2-3 minutes, which worked well (again, the Q&A afterward was much tougher than the initial presentation).

Q: How important are language skills for these equity research roles in Hong Kong?

A: Oh, you need to know Mandarin.

Most of the companies are based in mainland China, and management teams rarely, if ever, speak English.

So it would be almost impossible to work in equity research here without a high proficiency in written and spoken Chinese.

In one interview, they called me and did the whole thing in Mandarin; in other interviews, they did half English and half Mandarin.

Reflections and Final Thoughts

Q: Thanks for explaining all that.

Do you have any advice for other students in your position (completed a back or middle-office internship and now seeking front-office roles)?

A: Figure out which front-office area has the most overlap with your current role, and focus your efforts there.

I knew I’d have a low chance of getting into investment banking since there wasn’t much overlap with compliance, but we interacted more with the research and trading teams, so I focused on research.

If you have a short-term internship, go back to your boss and any previous interviewers, and ask about opportunities in different areas after you finish the internship.

For a longer-term internship, you might be able to “make the ask” after you’ve completed a few months in the role, as I did.

Finally, ask your team about their policy on internal transfers, and if they’re supportive, be upfront about your intentions.

If they’re not supportive, start contacting different firms.

Q: Great. Thanks for your time!

A: Thank you, anytime.

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. That is a very helpful article for me. because I’m also trying to move from compliance team to fixed income. Despite my passion and interest, employer’s views don’t care about them. However, it is encouragign to be offered with invitation of several interviews from fixed income sales-trading team. I will never give up. If i put my marginal efforts, I feel like I could success to move.

    1. Avatar
      M&I - Nicole

      Thanks for your input!

  2. Avatar
    Brian McKinsey

    Hi Brian,

    Thanks for another great article. I’m in a similar position as the OP. Just curious but what do you think about cold emailing MDs/HR within IBD/CM a few months into a year long internship that I’m doing right after graduation? Do you think they will be receptive at this time? What if I propose unpaid options since I get paid by my internship program cost center instead of the actual team? (I currently work at a well known BB firm in MO)

    1. Thanks! I think it’s fine to start emailing MDs/HR in other groups after you’ve spent a few months in a year-long internship right after graduation. As long as you have gotten to know your other team members and the senior people can vouch for you, others will be receptive.

      I personally would not propose an unpaid option because it reduces your credibility to offer that upfront – if you can really add a lot of value, why would you offer to work for free? University students can get away with it sometimes, but it’s harder once you’ve graduated. I would only mention it if they specifically name “cost” as an objection to hiring you or hiring in general.

      1. Avatar
        Brian McKinsey

        Thanks for the helpful reply! I’ll definitely give it a shot and see what happens. I asked about the non-paid option because sometimes I hear back from teams and they simply say that they “don’t have headcount” atm. Do you think this equates to a cost-based objection or would it be indirectly telling me they’re not interested? Also the internship is a rotational one, so I was thinking of spinning it as a potential new “rotation” within that team.

        1. It’s partially a cost-based objection, but could also be due to leadership issues, office politics, etc.

          I would frame your request as more of a “rotation into their group” or a “trial rotation” to make it seem like less of a long-term commitment.

          A large bank is unlikely to move a paid intern (you) into an unpaid role, simply because it creates some legal risk for them.

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