From Liberal Arts Major with No Finance Experience in the UK to Equity Research in… Mexico
Ask anyone what banks have been doing over the past few years, and you’ll get the same answer: “Laying people off! Cutting! Downsizing!”
Now, that’s not quite true because hiring has actually fluctuated from year to year, but the basic point is true: the finance industry has shrunk quite a bit from the last bubble in most countries in Europe and North America….
Except for Mexico.
As banks scaled back their hiring in New York and London post-crisis, they bounced back to growth much more quickly in Mexico, Brazil, and other countries in Latin America.
Today, you’ll hear just what a difference this trend made for one reader who went from no finance experience and a liberal arts degree in the UK to equity research at a bulge bracket bank in Mexico.
So pull out a tequila shot, or two, or three, and get ready for yet another story of defying the odds to get into the industry:
Graduating Into the Crisis 101
Q: You know the drill. Walk us through how it all began.
A: I’m from the UK originally; I didn’t quite know what I wanted to do at university, so I studied some literature, some history, and ended up with a degree in “American Studies,” which just means US History/Literature.
I realized pretty early on that it wasn’t exactly for me, but I just wanted to stick it out and finish the degree – I attempted to take more economics and political economy classes since I was more interested in those, but flexibility was limited.
Then I graduated into the midst of the financial crisis, realized that my employment prospects were quite bad, and knew that my only chance would be to head off to London and look for work anywhere I could find it.
Q: I have a feeling this part of your story doesn’t end with you winning an IB offer in London.
A: Hah, nope, not at all. I ended up working in the recruitment industry (i.e. headhunting) because it was the only one hiring fairly actively back then.
This industry has a terrible reputation, but I quite liked the fact that it was a sales-oriented role and was lured by the promise of high earnings early on (very commission-driven). Plus, I didn’t have many options at the time.
I worked as a recruitment consultant at a small agency in London for a year, which ended up not being quite as bad as you might think, at least for the networking. Through a contact I made on the job, I moved over to a bulge bracket bank in a total “back office” capacity, working on recruitment for the bank.
I gained a ton of insight into the on-campus recruiting process, but I was the one administering it even though I wanted to be one of the candidates instead.
From understanding the recruitment process on the inside, I also knew that the front office even at a smaller bank would have been completely beyond my reach at this time, since I had poor grades from a lesser-known university.
Q: So what was your next move?
A: The same thing anyone else would do in this situation: complete another Bachelor’s program at a top school.
I decided to do a part-time economics & finance degree from one of the top schools in London so that I could continue working while taking online classes at the same time.
I knew, of course, that it wouldn’t be the same as the real thing, but at least I could start writing a better school’s name on my CV when applying for other positions.
I took a bit of time off to study for exams right at the end of my first year, and then one of the directors at my bank set me up with a position at a different bank in London since I had expressed interest in moving in the direction of the front office.
Q: So instead of helping you move internally, he directed you to another bank instead?
A: Yes! The director moved to this same bank himself.
This role was still not at all “front office” – but I was doing actual analysis rather than recruiting, and I was getting a lot of exposure to Excel and finance while working with and meeting a lot of people in different divisions there.
And, perhaps more importantly, now I could write the names of 2 well-known banks on my CV and the name of one of the top schools in the UK.
Q: So you stayed at this new bank, finished the online degree, and then tried to make a move into the front office there?
A: No, that would be far too boring a path to take!
I spent a year in this new role, but got to a point where I wasn’t learning much and didn’t have a great chance of advancing. It really is very difficult to move into the front office from the back office these days.
I had always wanted to live abroad and learn another language right after university, but didn’t have a chance to do so back then.
So I took everything I owned, set off for Mexico, and planned to learn Spanish while teaching English there.
I wanted to continue my part-time online degree while there, catch some sun, learn a new language, and figure it out from there.
To Mexico and Beyond
So what happened when you arrived in your new home?
A: I got there and immediately found a position teaching “business English” in Mexico City – which meant “teaching English to bank employees.”
At the same time, I also started networking a lot to get my social life going there.
After about 3 months, I was getting tired of the English teaching role – it got repetitive after a while, and unlike in countries such as Japan/Korea the pay was quite poor.
But since I had been teaching business English, I made lots of contacts at banks there and started asking them about open positions.
They saw the names of the large banks on my CV and sometimes didn’t take the time to understand the specifics of what I did – they just said, “Well, he worked at these 2 brand-name banks, he must know what he’s doing.”
So I started getting referrals to banks directly for interviews. In Mexico, it’s a highly informal process where you can easily get interviews if you know a few people in the right places.
Q: OK, but wait a minute: you had just arrived there 3 months ago. There’s no way you could have learned Spanish in that amount of time.
Is it not required for finance roles there?
A: To clarify, you do need Spanish for IB and PE-type roles there since you work with local companies and many people won’t know English.
I interviewed for a few of those roles and they said, “We’re happy to interview you and give you a shot if you have intermediate-level Spanish, but if you come on board you need to get to business-level Spanish ASAP.”
I focused on equity research roles because you don’t need Spanish quite as much for those – all the reports are still written in English since they’re sent to investors worldwide, and the investor relations departments of large companies in Mexico also all speak English because they cater to those international investors as well.
Intermediate Spanish (and Google Translate) comes in handy when I need to refer to a local news source for info that is not yet on Bloomberg and other English language media sites, but that is not a deal-breaker, especially in the early days.
You definitely want to learn Spanish if you’re here for any length of time because you need it for informal / social occasions and it’s essential for “client relationships” past a certain seniority level.
Q: OK, thanks for clarifying. What made you so confident that you could even get these roles?
A: I just didn’t care about what I was “qualified” for. I said, “I’m in a foreign country, I don’t want to teach English, but I do want to stay here, so what do I have to lose by aiming for the moon?”
Also, I had built up so many contacts from my teaching job and highly sociable expat existence that it would have been a waste not to leverage them.
I ended up getting interviews at several bulge brackets in Mexico City, all through my contacts there, all within 1-2 months of each other.
The interviews were completely different from what I was expecting, mostly because they’re so much less formal and the recruiting system in Mexico is also completely different.
Q: How exactly is the recruiting process different?
A: They don’t have the “summer analyst programs” here where you work for a few months and then possibly get a full-time offer at the end.
Instead, they bring on interns throughout the year, often hiring or interviewing solely based on word-of-mouth, and most interns complete part-time ongoing internships in the last year to year-and-a-half of university here.
If they do well enough, they’ll receive full-time offers.
As a result, interns work far more closely with the team than typical summer analysts do – and it’s great for the bank because they get “cheap labor” and can also take much longer to evaluate your performance before giving you an offer.
Q: Sounds more like the system in many European countries where year-round recruiting is more common…
So what about interviews?
A: They were far less intense than what your articles on equity research have suggested.
Here’s what I encountered:
- 1-hour long numerical “numerical reasoning test” (very similar to the ones given in the UK)
- After this test, I went through 3 back-to-back interviews with Associates at the bank
- For the “2nd & final round,” I had a telephone interview with the Lead Analyst on the team (he is based abroad) and he mostly just asked if I could “perform certain tasks,” such as building valuations and 3-statement models
- Most interviews were “fit”-focused more than anything else, or simply asked me to describe certain aspects of the job
- Almost everyone I spoke with was in their mid-20’s– very few senior people interviewed me
- Most of the technical questions were pretty basic – the time value of money, accounting, the 3 statements, valuation…
There was no stock pitch, no modeling test, no case study, or anything else like that.
I had read your guides and articles here and prepared for something much more difficult, which impressed them – apparently, a lot of candidates from Mexico don’t do much preparation and often come in without a clear idea of what different divisions do.
It was fairly easy to rise above the rest just by understanding exactly what equity research is, why you want to do it more than IB or sales & trading (side note: no chance for S&T without native-level Spanish), and being as prepared for the interview as you would be in NY or London.
Mexico Equity Research – Rating: Outperform
Q: So I’m assuming you went through all this and won offer(s) after a few months.
A: Yeah, it was a fairly quick process because it was so informal.
Essentially, they just viewed me as a full-time intern joining the team at first and the “barriers to entry” were lower since it wasn’t a locked-in, long-term commitment on their part.
Q: Right, even interns in the US sometimes get that treatment at very small firms here.
So how is the equity research job itself different in Mexico?
A: It’s not as different as you’d expect.
I’ve seen some of your accounts of ER in other markets like the Middle East and what a strange culture it can be there – but at a bulge bracket bank here, it’s still fairly close to what your original article on equity research jobs described.
Most of our clients are institutional investors in NY or London with an emerging markets focus or an emerging markets team.
In fact, I’d say around 75-80% of the buy-side investors we work with are foreign. Of the remainder, 15-20% are in Brazil and then only around 5% are actually local Mexican funds.
So the expectations are very similar to NY or London roles, and most of our senior people are in those places rather than here in Mexico City.
Most companies here are not “amateur” like you might see in other emerging markets – disclosure requirements have gotten stricter over time, and all companies here have transitioned into GAAP by now. That switch was fairly recent, though, so sometimes we have to spend time modifying previous years’ data to make it comparable.
You do still see some “funny business” in filings, but those companies are in the minority or are shunned by serious investors, so we do not cover them.
Other sectors represent a smaller percentage of what we do.
Q: Great. What about your own interaction with institutional investors?
A: So far, it has mostly been answering client requests, sometimes going to events such as Investor Days (though that is more for the companies we cover rather than the buy-side), attending conferences, and so on.
One advantage of having the more senior people abroad is that if a client wants to visit a coverage company, you will be the one making it happen and accompanying them for the day, so you get exposure to some reasonably well-known PMs – which I would imagine is more difficult when you are junior in NY or London.
As I mentioned, most of the investors we work with are foreign because the buy-side is still nascent in Mexico. Brazil is a bit further ahead, but it’s not even close to what you see in developed markets, so there’s a lot of growth in store for the region over the next few decades.
Q: You mentioned how interviews were not very technical – what about the job itself?
A: It’s all fairly standard and you use the same types of analyses. Especially since companies here now use GAAP, you don’t need to make (m)any adjustments.
The only real difference is that you have to price in extra political / emerging markets risk since the country is more “unstable” than those in developed markets – although, with events over the past few years I’m not even sure how “safe” developed countries are anymore…
Culture: Fiesta or Siesta?
Q: And I’m assuming that things are pretty relaxed since everyone there is young and there aren’t many senior staff?
A: Yes and no. The “oldest” people here (in EQ) are in their mid-20’s, so in that sense it’s more relaxed with the immediate team.
But everyone is still very serious about what they do, and the hours are not much different from what you find in London or NY.
During earnings season, it still gets crazy and turns into near-investment banking hours. The rest of the time, finishing at 7 – 8 PM after spending 12 hours in the office is more likely.
We don’t have much direct supervision in this office, but that doesn’t make a difference because senior people elsewhere still want to see our output constantly.
Q: Well, at least the pay should be in the same range then, right? I mean, everyone says pay in Brazil is actually higher than in NY/London…
A: I wish! You can’t compare it to Brazil because that’s a bigger market, the cost of living is higher, and talent is extremely scarce, so pay in traditional IB/PE roles can be higher.
Here, however, the compensation is disproportionately lower – even if you adjust for PPP, it’s still significantly less than what you would have earned in a developed market.
And, of course, they pay interns even less and internships are close to “unpaid.”
However, you do get bigger “bumps” as you advance than you would in developed markets.
So once you’ve been here for a few years, the pay might potentially catch up to the level of 2nd/3rd year associates in ER elsewhere. And if you adjust for PPP and the quality of life you can get, it might even overtake it.
The bottom-line: do NOT come here for the money.
If you really like the country and culture and want a market that’s easier to get into, it can be great – just make sure you know what you’re getting into.
Q: Does this issue with pay prompt people to move to other countries?
A: Sometimes, yes, but it’s also about getting broader exposure and better access to buy-side roles at larger funds. I’ve seen people move to Brazil, NY, and London after working here for a few years.
Local exit opportunities are actually quite good; I’ve seen people go to local PE firms (tiny but growing quickly), trading firms, top strategy consulting firms (McKinsey/BCG), or even go to blue-chip companies for the corporate finance career path, or investor relations roles.
If you want to move “up” in market prestige and get yourself to NY / London / HK, you will need to leverage your emerging market expertise; emerging markets-focused asset management firms or hedge funds are your most likely route when making a move like that.
Q: So, are you planning to do something like that in the future?
A: I haven’t been here long enough to say quite yet. At the minimum, I’m planning to stay here for a few years and then consider moving to another market.
I could actually see myself going to Asia since I have a bit of an “emerging markets bug” after this experience!
Q: Awesome. Anything else you want to add for our readers?
A: A few other points:
- The CFA. Yes, I know you hate it, but they actually care about it here. It became a talking point in a few interviews when I mentioned that I was studying for it. They have no idea what you really know when you interview for roles in Mexico, so by stating that you’ve signed up for the CFA or have taken it, you’re “validating” yourself and reducing the risk in hiring you. And especially for ER, the material in the CFA is very relevant to the job.
- Emerging Markets. Here’s a fun stat for you: global emerging markets now make up over 25% of equity capital markets worldwide, and that’s only going to grow in coming years. So you’ll still get great exposure to large clients here, team sizes are getting bigger and bigger, and it’s a great field to be in. And that’s not even mentioning the fun lifestyle: being an expat is awesome.
Finally, I just wanted to say that I decided to share my story because I saw some negative / discouraging comments on your site about getting into finance in emerging markets and I had a completely different experience.
While I think the above is true in places like China where it’s very difficult for foreigners to break in, recruiting can be much easier in some of the other “emerging markets,” especially if it’s for a role that doesn’t require proficiency in the local language.
So don’t sell yourself short or assume that you can’t do it just because you’re not from the country.
Q: Thanks for your time and for sharing your story!
A: My pleasure.
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