How to Break Into Equity Research
So, you've set your sights on sell-side equity research. And every job posting you've come across reads something like this:
We are looking for someone with 2-3 years of experience in equity research, buy-side experience, or investment banking experience in the sector we are hiring for.
I know what you're thinking: how on earth do I land my first job in a field that requires me to have prior experience in that exact field?
Well, fear not, because I'm here to guide you through the process of securing a seat in sell-side equity research. Let's dive in.
P.S. Buy-side networking course enrollment ends today!
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Where are these elusive jobs?
Equity research teams operate lean. The largest sector teams might consist of only 5-6 people, and unlike in investment banking, turnover is minimal. If you've been eyeing this profession, you've likely noticed the scarcity of job openings.
To save you time, you can leverage my research job board where I handle the cross-checking and setting up job alerts with all the firms for you. So that you can focus on perfecting your stock pitch and networking.
To help you navigate, I've compiled a list of firms that offer equity research to institutional investors. They are your potential next employers.
Broadly, these firms fall into three categories:
Big banks: Think Goldman Sachs, J.P. Morgan, Bank of America, and Morgan Stanley.
Regional and middle-market: Think Piper Sandler, Raymond James, Truist, and TD Cowen. There are also tons of lesser-known ones. This segment has been consolidating, such as Piper Jaffray merging with Sandler O'Neill and TD acquiring Cowen, Suntrust merging with BB&T to form Truist.
Boutiques: They don't offer investment banking services, so they tend to be more objective and monetize their products differently. Major players include Bernstein, Wolfe, Melius, and Zelman. Research boutique is a really tough business and is typically started by a legendary analyst who used to work in one of the former two categories (eg. Ivy Zelman - Credit Suisse First Boston, Dana Telsey - Bear Stearns)
Now that you understand the landscape, apply the two-pronged approach.
Leverage job boards
Create LinkedIn job alerts with keywords such as "Equity Research." You'll need to sift through them one by one to ensure it’s an active search.
Next, set up job alerts on firms with career websites. For some firms, you'll need to bookmark the website and check it daily, while for others, you can sign up to receive emails for new openings.
Check general finance job boards like eFinancialCareer daily. Finally, leverage profession-specific job sites if you are focusing on specific industries. For example, Docjobs for biotech and life science seats.
To save you time, you can leverage my research job board.
As you expand your sell-side research network, keep an eye on senior analysts' LinkedIn/Twitter accounts; they can post "I am hiring associates" statuses. This is your cue to send a tailored message and a work sample to initiate a conversation. Be particularly diligent at the beginning of each calendar year, as associates tend to move after bonuses, creating job openings.
Networking
Networking not only keeps you top-of-mind when a job opens up but also provides insights into your future boss’ work style and mentoring abilities.
Target three broad types of people:
Junior Employees (Jr. Analyst, Associate, VP)
Senior Analysts (i.e., the MD or Director with sector coverage)
Director of Research (DoR)
You can choose whom to reach out based on your affinity with them.
The DoR manages the entire equity research department, including talent sourcing. The DoR can connect you with future openings within the firm, giving you a steady pipeline of leads. Just keep in mind that you won't fully understand a team's dynamics until you speak with the hiring senior analyst and his/her juniors. Nevertheless, DoRs serve as a powerful top-down funnel and should be part of your job search strategy.
With sector team junior employees and senior analysts, you can make a more relevant pitch because job openings will come from specific teams.
To find their contact information, start by searching for equity research reports. This is an easy way to uncover: 1) Your contact's email address.; 2) The email format for a particular research firm.
Tools like Rocketreach can provide insights into the probability of the email format for a given firm, though you may face challenges if the firm uses middle names in their email addresses (if so, you have to ask around.) Additionally, some comprehensive reports include the entire research department roster along with their email addresses. Certain firms also list their analysts and their contact details directly on their websites.
In preparation for networking, prepare three items: an introductory message, a stock write-up, and an Excel financial model
Your introductory message should effectively convey:
Why you're reaching out: If there's a current opening, express your interest: "I am interested in working on your team." If not, convey your intention to learn about their successful career in equity research. Some schmoozing doesn’t hurt even if you are talking to a bottom-of-the-barrel tier analyst.
Know your story: Explain your professional background. why you're pursuing a career in sell-side equity research, your passion for stock investing, and how your past experiences prepare you for this role. Highlight transferable skills.
Wall Street professionals are busy. Keep your message brief and focused. Remember, it's your responsibility to make the sale.
Lead with a stock pitch. Attach your stock write-up and Excel financial model with your intro message to demonstrate your technical skills. Senior analysts always prefer current research associates because they already know how to do the job and understand how the industry works. Providing tangible work products can alleviate hiring managers' concerns about your ability to model and write because they don’t have time to train you.
Pitch a stock outside of your interviewer's covered industry. For example, if you're interviewing with a media analyst, pitch a non-tech stock. Aim to be as far away from TMT (Technology, Media, Telecom) as possible.
Prepare multiple stock pitches if you want to broaden your opportunity set. You can pitch your tech stock to the healthcare analyst and your healthcare stock to the tech analyst.
If you're not applying for an MBA associate position and this is your first job in sell-side research, your stock call doesn't need to be correct. Focus on delivering a well-rehearsed pitch and demonstrating a clear understanding of what drives the business and your thesis logic.
Familiarize yourself with the major industry trends in the sector you're interviewing for. This demonstrates your interest and allows you to ask insightful questions.
End with a call to action: Ask to set up a call or an in-person coffee chat to further discuss opportunities.
Here's when you should avoid reaching out:
Mondays: People are usually catching up on tasks after the weekend, making it a hectic time.
During market hours: People are focused on market activities, making it difficult to focus on non-work related things.
During earnings season: When big banks release earnings reports, earnings season starts. Try to schedule calls before the start of earnings season because everyone in the ecosystem is working longer than usual hours.
Holidays: people don’t want to talk about work on vacation
Friday afternoon: Many people are already winding down for the weekend, and productivity tends to decline, particularly before a long weekend.
If you don’t receive a response: Follow up once after one week. Follow up once more after two weeks. If you still don't receive a response, take it as a hint and refrain from further follow-ups. It's best to move on and focus your efforts elsewhere.
Keep track of your outreach efforts using a spreadsheet to stay organized and efficient.
What the hiring team wants to ascertain
Can you model and write effectively? A stock write-up and Excel financial model can convince them that.
Do I like you? Am I comfortable putting you in front of buy-side clients or executives? Show enthusiasm for the role and industry, and ensure you come across as personable and reliable.
Are you committed to the profession? Convey your passion for equity research and your dedication to building a successful career in the field
Why we should choose you over other candidates? Emphasize any relevant experiences, skills, or achievements that set you apart from others.
Soft skills play a crucial role in this industry, so focus on aspects like your fashion sense and ability to communicate fluently in English. Effective communication is essential for influencing others to buy into your ideas.
In equity research, there's a daily morning call where senior analysts pitch their stock ideas or thematic reports to salespeople. If you can't articulate your ideas concisely within 2-3 minutes, salespeople may not relay your pitch to buy-side clients, which can hinder your career progression. Therefore, honing your ability to communicate complex ideas clearly and succinctly is critical for success in this field.
Sell-side has a heavy emphasis on people skills because it’s a sales job, especially at a senior level. When the profession has the word “sell” in it, they really mean it.
As a Senior Analyst, you will be managing relationships with 20+ sets of company CEOs and CFOs, hundreds if not thousands of institutional investors, equity salespeople within your firm, and other contacts that help you understand your sector or provide channel checks. There won’t be as much spreadsheet work involved, it’s all people skills.
Here's how you can demonstrate your likability:
Read and Practice Techniques: Invest time in studying books by authors like Dale Carnegie and Robert Cialdini, who offer insights into effective communication and persuasion techniques. Practice their strategies to enhance your interpersonal skills. Leverage other resources from my recommended list if you find Carnegie and Cialdini insufficient for your needs.
Find Common Ground: Identify commonalities with your future team members to foster rapport and demonstrate fit within the team culture. Do your homework to uncover shared experiences, such as attending the same alma mater, sharing hobbies, or recently reading the same book.
Highlight Commitment: Even the lifers know the sell-side is not for everyone, but you need to convince the interviewer that you are not a flight risk. Every candidate approaches this question differently. You can highlight how you value that the sell-side gives you exposure to the diversity of investment styles (vs buy-side where you commit to a style), or continuity of coverage (vs. investment banking, which is transaction-based, meaning you won’t care how the company performs after you take it public, which becomes equity research’s job to cover it)
While soft skills are essential, your analytical skills provide the technical foundation. When it comes to modeling, here's how you can excel:
Self-teach financial modeling. While an investment banking course can provide you with the mechanics, it's essential to go beyond just numbers and understand the business implications. Many modeling courses focus solely on formulas and calculations without tying them to the real-world business context.
To stand out, ensure your models reflect an understanding of the company's revenue and cost drivers. Incorporate unit economics modeling into your three-statement model to demonstrate a holistic understanding of the business.
For example, understanding concepts like working capital is crucial, but it's equally important to grasp how it impacts a company's cash flow and overall value.
Why you?
Be growth-minded: Never assume you are less competitive than others with more relevant experiences. You never know the trait that tips the scale in your favor. When I had zero professional experience in equity research, I got the job against a competitor who had 5 years of equity research experience because I have statistics and data skills that are valued by my team. An underdog mindset is good to have but it should only fuel you, so think hard about what makes you unique and lean into that strength.
For example, it could be:
Real industry experience (eg. you worked in life science sales, as an oil and gas engineer, developed an iPhone app, etc.): You dramatically underestimate how much of an edge industry experience is versus college grads who hit the research desk reading 10-Ks all day. I bet the oldies will tell you it’s the intel they gather by talking to people and “going into the field” at conferences or actual physical plants that gave them the biggest investment insights.
Special skills: Programming - VBA/SQL; BI/Data analytics - Tableau/Qlik/Alteryx
How do I break in from a unique background?
Many of you come to me with the question: what about I'm coming from this profession (Big 4 accounting, private wealth, boutique consulting, etc.) and I want to work in equity research?
You might think your situation is unique, but it’s not. Regardless of what professional background you came from, develop the skills discussed in the article and get your story right. You will need to bridge the skill and perception gap to break in.
Hope this helps. Make sure to read my other career articles on sell-side equity research. Let me know your thoughts in the comments.
Thanks for reading. I will talk to you next time.
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