Hi all–I’m currently at a crossroads and I was hoping you could help weigh in… My ultimate goal is to become an equity research associate. However, what always dings me is my lack of financial modelling experience. In trying to figure out how to boost my appeal, I came across a very insightful article by Jason Voss, CFA:
http://blogs.cfainstitute.org/investor/2013/09/12/advice-on-how-to-become-a-research-analyst/ Essentially, he recommends creating a website where you post your research reports, financial models, CV, market commentary, etc. That way, even if you lack formal job experience, you can present these “tangible” examples of your abilities. But obviously, that’s a time-consuming endeavor and just around the corner is (yup, you guessed it) another CFA exam! Specifically for me, that would be the 2015 level III exam. So I’m stuck between two paths: 1. Skip this year’s exam and push hard to develop this website of “tangible” experience and push really hard to land an equity research role. I should note that I’ve been in contact with my firm’s internal recruiters who have relayed a preference for internal candidates and that with demonstrable modeling skills, my chances would be quite good.
2. Sit for this year’s exam and delay my transition efforts until after level III. It’s a very difficult cost-benefit analysis but I’m interested to hear what you all think. Thanks!
Is CFA L3 going to increase your chances of getting an ER role if you already have L2? I highly doubt it.
Is learning how to model companies going to get you your dream job in ER? Not likely.
Will you increase your chances of breaking into ER by learning how to model and write up reports on companies? Yeah probably, but it ultimatley depends on how you “market” yourself. I wouldn’t put all your hopes on an internal transition, this more often than not doesn’t work out (that’s just the unfortunate reality of the situation) - still pursue this but make sure you keep applying elsewhere and networking with people in the industry (even doing this will help your stock pitches and interview banter).
Can you do both CFA L3 and learn how to model, write reports, post your work online? I would say yes, but this depends on your personal situation. If you really want it bad enough though, then other stuff won’t get in your way. CFA L3 is in June NEXT YEAR. Why not get started on the research stuff now, and then focus on CFA later?
@JSigs : Why don’t you think of a mix: major thrust for task 2 i.e. Level 3 (as that is what will prove your credentials to undertake serious research complimented by knowledge needed to infer) as per a conscious plan, while undertaking the task 1 with a balanced approach till June 2015 by devoting a fixed hour every day (so that you can prove your ‘tangible’ examples of ability too). Upto New Year Day have the task 1 as priority devoting comparatively more hours to it and thereafter for next 2 months equal weightage for both and for remaining 3 months CFA should be the priority with more and more hours for Level 3. This situation is somewhat like the dilemma of some Level 3 lady candidates who are in advanced stage of pregnancy and have to cater for both the new baby they are expecting as well as the Level 3 which they are determined to pass. So, though at first sight it may look like a formidable task but from AF posts it is apparent that with little bit of planning, focus and grit it can be done (and if they can do it, why not you?).
One way to prepare yourself for this may be to design the format and contents yourself and simultaneously outsource the designing of the website to a professional (on net lot of freshers from India / US offer their services to do it beautifully for only a few bucks!) so that both the tasks are done together and time is saved. Once uploaded let him/her manage the technical and maintenance part, using net you just provide the contents to him/her and ensure it is upto your standard and satisfaction. Should not mind spending a few precious bucks as for you the time during this period is at a premium.
This way you will have made substantial progress in developing the website of ‘tangible’ experience by Level 3 exam day while being prepared to face the Level 3 challenge too. After June 7, 2015 you will have all the time to do the website thing single-mindedly. So with about 300 hours of investment in task 1 and about 300+ hours of preparation for the level 3 (task 2) you will be better equipped to face the challenge. If you think it is too tough mission, well, nothing comes easy in life! Go ahead and try it, I am sure you will be able to do it. Just plan it well before you embark on it.
While it pains me to say, I’ve slowly come to that realization myself. In fact, I’ve seen several of my friends who have recently obtained their charter and tried to make similar moves but to no avail, often times being beaten out by ex-ibankers or sell-side research associates with no CFA progress at all.
I don’t see it as a magic bullet, however, I see it as being what’s available to me given that my current role (results analyst for a top 5 AUM asset management firm) offers no direct opportunities to build modeling experience. I see it simply as a way to increase my chances. You’re absolutely right, and I’m not pinning all my hopes on an internal transfer (though I would LOVE to stay at this firm) but it is worth noting that they do have a history of favoring internal candidates, though this may be changing. But yes, I will continue to network outside my firm and be open to outside opportunities.
After giving it more and more thought and after collecting valuable insight from kind people such as yourself, I think this is the route I’m going to pursue. As @mygos lays out in his post below, I think the best thing I can do is to prioritize level III this coming year, while also spending some time on building those “tangible” skills, and then switching gears after my test.
I think you nailed it right on the head! This is extremely sensible and well thought out advice and I whole-heartedly appreciate it. All too often I approach things with an “either this or that” mindset, when in this case a more balanced approach is necessary. As you laid out in your post, I think prioritizing passing level III this coming year while putting in some effort to developing my website content (outsourcing the design to someone else), and then switching gears after the exam will prove to be the best route. To your point, if I can successfully pass while also having my website up and running, then I will be fully armed so to speak to face the challenge of making the switch. If candidates who are expecting can do it then so can I!
Thanks again, @mygos and @capaldij for your advice! This has seriously been extremely helpful. Thank you so much!
For what its worth - splash the cash on the Breaking Into Wall Street Fundamentals course.
This will teach you how to create a pretty decent equity reseach model by learning from videos and practice excel files - you will pick up valuation modeling much quicker this way (ignore the Leverage Buyout modeling stuff etc. if its just plain vanilla ER you want to do).