Note: This post has been amended (see the end) to include information requested by an overwhelming number of the readers. Thanks for your interest!
I am frequently asked, "What can I do to improve my chances of getting hired as a research analyst?" Beyond the obvious — become a CFA charterholder — there are a number of other steps that aspiring analysts may take.
Making the Intangible Tangible
What an aspiring analyst has to offer to an employer are largely abstract- and creative-thinking skills. These skills are intangible and difficult for recruiters to assess. This is one reason why firms in finance tend to recruit from the same schools decade after decade: rigor of the curriculum and reliably high quality candidates. This is also why those without experience in the investment industry find it hard to get hired for research analyst positions. That is, in the absence of other evidence, firms hire what they think they can depend on — that is, what is tangible: your education and your experience.
But do not despair if you have not gone to your country's top educational institution or if you have no experience! I went to the University of Colorado (not a top school for finance recruiters) and had very little experience when I was hired as a research analyst at one of the largest and best-known US money managers.
What employers really want is for your intangible skills to be made tangible. This realization empowers you tremendously, because with this framework, you can focus on providing concrete evidence that you have the skills necessary for being an effective analyst. When I began my career I created a personal website that included: examples of my own personal research analysis on companies; book reviews of economics, finance, and investment texts that demonstrated my ability to think critically about information; and an extended version of my CV (i.e., greater than the orthodox one-page maximum), so human resources departments could see if I had what it took to be a research analyst.
By engaging in these activities it will also sharpen your own skill set. For example, when I created my own research reports — which I highly encourage you to do — I used only primary data sources, such as company annual reports. I also did all of my own calculations for things like future gross domestic product (GDP), the future shape of the yield curve, and the cost of capital.
Recognize that your opinion matters. Companies will be hiring you for your opinion as much as for your skill set. They hire you with the expectation that you will take responsibility for your choices. So, if you choose to make your intangible skills tangible by creating your own research reports then you must track how your investment recommendations do by noting the prices of assets on the day that you recommended them for purchase and then track how they perform over time. You must be honest with yourself, otherwise you won't learn anything. This is more for you than for your future employer. (Though it certainly wouldn't look good for you to get caught fudging the numbers in even a theoretical exercise.) Markets provide a valuable feedback mechanism for assessing your skill set. The beautiful and terrifying thing about investment management is that the results of your performance are measured objectively. You either did well for people or you did not. So, if you are not doing very well, then you need to identify where your analysis broke down, and then strive to improve.
I have a friend who took a similar approach as me to getting work. He sent his research reports to investment firms every single month for two years and eventually got a job interview. By doing this process he taught himself to be an analyst.
Look for a Mentor
Across the globe, CFA Institute has scores of local societies, which are made up of many generous individuals, many of whom may be willing to guide your career track. If that does not appeal, then contact money managers whose process is in alignment with your own. You may be intimidated, but the worst they can say is "no." In any case, any possible anxiety you experience in approaching investment heroes is good practice for the anxiety you may experience in approaching management of prospective businesses, some of whom may include the likes of Rupert Murdoch or Li Ka-Shing.
Analysis Is Probably Not What You Think It Is
Most analysts — the aspiring and the experienced — think that investing is about facts, models, mathematics, and analysis. Yet, as I discuss extensively in my own book, The Intuitive Investor, there is no such thing as a future fact. Facts, by definition, are things that occurred in the past. Yet investing results unfold in the future. What this means is that investing is as much a creative and intuitive process as it is an analytical process. To be a well-rounded and experienced candidate you need to be able to think in a balanced fashion — that is, both analytically and creatively. Therefore, engage in activities that enhance your creativity, too. For me, I am an active meditator, as well as an artist. Your success as an analyst will depend on your ability to synthesize information and to see things no one else is seeing. After all, by definition, if you want to earn returns that no one else is earning, you have to do things that no one else is doing.
Stock Your Mental Toolkit
Another tip is to read, read, read, read. Read investment texts. Read texts on geopolitics. Read texts on mergers and acquisitions. Read economic texts. Read anything that sparks your curiosity, even fiction (potent advice from Tom Brakke, CFA). And most of all, read the news, from many sources every single day, and begin to develop an opinion about the news and how it affects different countries, industries, businesses, and individuals. The most important skill for any investor is: understanding information. He who understands information the best does better, and he who understands information the best and acts decisively on that information wins the day. When I was an aspiring analyst if I encountered a piece of news I did not understand, I would read not just the article in question, but also an entire academic paper or book on the subject. I did this day after day, month after month, and year after year until my mental mosaic became large.
So let your ignorance guide you. What you do not know and understand should inform what you try and learn next.
Introspection
Spend some time figuring out who you are as an analyst. This is critically important. Why? If your natural strengths as a thinker make you a good trader, then you will be very frustrated working at a deep value, long-term focused money management firm. Likewise, if your character is more in line with a long-term, deliberate process, then you will likely be frustrated at a high-frequency trading (HFT) shop. You want to know yourself so that you can make an informed decision about where you want to work, about what type of analysis works in accord with your mind, and about where to spend huge parts of your life.
Furthermore, your introspective process will allow you to take an inventory of your innate strengths and weaknesses — and we all have both. You want to develop skills that accentuate your existing talents and skills that compensate for your shortcomings, too.
Be Patient
Expect this entire process to take a lot of time. From the time I first had the idea to become a research analyst to the time I got hired doing the work I wanted to do, it took me five years. For some people it is a much shorter process. But then, having done all of the work I described above, once hired, I was promoted to portfolio manager in two short years and was fortunate enough (and maybe skilled enough) to have retired at age 35.
Best wishes for success!
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Update: Many of you in the comments section have requested a link to an example research report. When I began my career I got a copy of a brokerage report from my local market and then used it as the basis for my own report. I am going to point those interested in what a research report looks like to Zacks.com.
All posts are the opinion of the author. As such, they should not be construed as investment advice, nor do the opinions expressed necessarily reflect the views of CFA Institute or the author’s employer.
Image credit: ©Getty Images/TommL
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If you liked this post, don’t forget to subscribe to the Enterprising Investor.
All posts are the opinion of the author. As such, they should not be construed as investment advice, nor do the opinions expressed necessarily reflect the views of CFA Institute or the author’s employer. Image credit: ©Getty Images / Ascent / PKS Media Inc.
Professional Learning for CFA Institute Members
CFA Institute members are empowered to self-determine and self-report professional learning (PL) credits earned, including content on Enterprising Investor. Members can record credits easily using their online PL tracker.
410 Comments
Thank you a ton for all the advice!
Welcome.
Hi Jason,
It took me a half a day to read your entire response on this thread and it's very bad on my part to tell you with mere words that it was just Helpful or great ..!! But Each and every active responses of yours is a new horizon and avenues to Deep Career Insights to any.!
I too have a very few things to ask you to get a perspective,!
My Education & Professional background :
** Am 32 now and single..:)
** Commerce Graduate(good university) and MBA finance in India (not a Top institue)...:)
** 8.5 Years professional experience in Retail Banking - sales (2yrs) ,Wealth Mangaement & Financial Planning (6.5 yrs)
Passion :
Reading, reading, readingg..
Photography, photography, abstract, imaginations,...
Researching n analysing, analysing, analysing any datas or informations..
Investigating, Inquiring any kind of stuffs...
Aspiring...:
I did try my CFA L1 and didn't able to complete it in first shot.. Due to work in retail banking and managing clients assets, did not able to give quality time.!
Now am seriously thinking to restart CFA L1 in dec and take it up.
Am well versed with finance topics, and having experience in Market, economy, Invesments advisory and products, I don't find it's very tough.!
only dedication with quality time is needed.
Now I got into Midsize firm and got a good time to focus...
My questions are :
1. Having the vast experience in Invesment advisory and Indiviudal portfolio management... (Which are all pure family office and sales driven...:(
What are my scope to a career transitions in Pure Non-sales avenues..:). Like research and products of any financial services, fund houses, Or buy side to sell side ... But with leveraging my past experiences also I can transition easily to any new roles after CFA....
So that I don't have to start from scratch(since I don't have ER or Reseach experiences)
2. Since I am like a Ambivert, I mostly spend on researching, reading and coming up with new solutions for any investments issues to clients,...and get to the clients table in a simple manner, I am able to be more successful in my current career area.. With managing some sizeable Asset Size....:)
But I feel there is too much of rat and race run for this in the market,... You either got to be with a big brands to attract clients or Start your own Family office setups to do what you like to do for clients as your own business of doing fiduciary works to clients in ethical manner.... But I don't see that quickly happening or rather it's not visible in my aspirations..!
3, Aspirign to retire in next 13 years, (by 45 before) I mean retiring from working for someone or someone's profit or aspirations....
Then do something on your own, ( complete spiritual life, yoga, creativity and involve in new ideas in society to part in humane change in society... Travel globally to learn new experiences in life)
These are the list I have it close to my heart...!
4.So in this juncture I am hanging between choosing CFA to restart, if restart what would be a best bet for me to aim high in next 13 years to grow and elevate to different higher levels..
5. I don't like to be Head of Sales or a Sales director of something or some sort...hence am not looking to grow in that direction at all....
6. What would be you best suggestion in this situation which you can give me.? Where I don't start my new career from junior role or something... At the same time can leverage my experience in a best possible way to ladder up quick.!
Await your valuable perspective.!
Cheers,
Neeraj
Hello Neeraj,
Thank you for your praise for the post - I am so pleased that you found it useful. I have copied and pasted your questions below...
1. Having the vast experience in Invesment advisory and Indiviudal portfolio management… (Which are all pure family office and sales driven…:(
What are my scope to a career transitions in Pure Non-sales avenues..:). Like research and products of any financial services, fund houses, Or buy side to sell side … But with leveraging my past experiences also I can transition easily to any new roles after CFA….
So that I don’t have to start from scratch(since I don’t have ER or Reseach experiences)
My background was somewhat similar. I exited my university education and took a job as a stock broker, which I was terrible at doing. I determined at the age of 24 that I wanted to be a research analyst. I then got my MBA and had completed Level I of the CFA program when I got my job as a research analyst. On the cover letter submitted with my CV for job applications I said something like, "As my CV demonstrates my knowledge of finance runs the entire gamut, from the back office, to the front lines of customer service, to research." In other words, I turned my weakness into a strength. Your interactions with customers is very valuable experience for research analysts because it ensures that you have an ethical focus because you have the end customer in mind. I would most certainly pursue a CFA charter. Also, spend time thinking about how your work experience ties directly to research analysis. No one is ever 'starting over' because all of life's experiences in your 32 years contain lessons and therefore knowledge that can be applied to the job of being a research analyst.
2. Since I am like a Ambivert, I mostly spend on researching, reading and coming up with new solutions for any investments issues to clients,…and get to the clients table in a simple manner, I am able to be more successful in my current career area.. With managing some sizeable Asset Size….:)
But I feel there is too much of rat and race run for this in the market,… You either got to be with a big brands to attract clients or Start your own Family office setups to do what you like to do for clients as your own business of doing fiduciary works to clients in ethical manner…. But I don’t see that quickly happening or rather it’s not visible in my aspirations..!
I don't see a question in what you wrote above. I think you are commenting on the nature of the asset management business and that you find it frustrating. Only you can answer this question for yourself: What do you want, and what are you prepared to do to get it?
3.Aspirign to retire in next 13 years, (by 45 before) I mean retiring from working for someone or someone’s profit or aspirations….
Then do something on your own, ( complete spiritual life, yoga, creativity and involve in new ideas in society to part in humane change in society… Travel globally to learn new experiences in life)
These are the list I have it close to my heart…!
These are worthy aspirations and they require tremendous amounts of work, intelligence, focus, and wisdom. If you make your work spiritual then you can work on the spiritual life simultaneous with investment management. For example, when I was a portfolio manager I saw myself as the custodian of my shareholders' dreams. I saw this as a sacred duty and a high calling.
4.So in this juncture I am hanging between choosing CFA to restart, if restart what would be a best bet for me to aim high in next 13 years to grow and elevate to different higher levels..
The CFA charter is a big help because its lessons focus on the skills needed by research analysts. You also need to begin marketing yourself so that people are aware of your skill set and your passion for investing. My own mindset when I was a candidate for a research analyst job was: "If people knew what I know about myself then they would hire me." I truly believed that statement. There is one very large implication of that statement, too. Namely, the task then is not just about acquiring skills but effectively communicating to others that you have the skills.
5. I don’t like to be Head of Sales or a Sales director of something or some sort…hence am not looking to grow in that direction at all….
Again, only you get to say "yes" or "no" to job opportunities.
6. What would be you best suggestion in this situation which you can give me.? Where I don’t start my new career from junior role or something… At the same time can leverage my experience in a best possible way to ladder up quick.!
You will have to start your career in a junior role. At the Davis Funds where I worked we had analysts join us with 10 years of experience of serving in the corporate finance department of oil and natural gas firms and they started out as junior analysts. This is the nature of the industry. If you happen to find a firm that hires you into a non-junior role then you must be congratulated : ) Another part of your mindset should be: Getting my initial job as a research analyst will be the hardest thing I ever do in my life and I MUST succeed.
With smiles,
Jason
Hello Jason,
Your pragmatic perspectives are valuable to ask more deeper questions to myself.!
That would only clear my roadblocks to get a clear sights on my ways.!
Yes I agree with your thoughts on highlighting oneself and staring with junior.
I will muddle over your comments and keep it pinned in my Desk...:). Until I reach some target.!
On the one of question I was trying to ask :
In India asset management and wealth advisory has became more of competitive industry. There are too many advisors for very less number of wealthy Clients.! One cannot make his life like in US, Europe you can have 10 wealthy Clients to make your career.!
In this above context & relying on my strengths in analytical n research capabilities I would rather transition myself to RA or ER or Fixed Income or Alternatives... I mean any investment products... You can be on Creating product side or rather Investing side to either for a small firms or in a corporate.
So what are the other opportunities area one can really try in coming days of this modern changing industry ? I know corporate finance has less exposure with CFA...
What about Venture capital Investing and Behavioural finance...?
What is your general reading and suggestion would be? I know as a finance & investment profession, I can choose what I love doing it within any gamut.. !!
I am very clear that I don't wants to aspire to became a head of asset management or head of advisors..:)
Rather I love to focus on Process, compliance, custodian., products & research rather then selling them to stakeholders or Ultra High networth clients...
What is your views? It would help me ask more questions to myself to reach clarity.!
Greatly Appreciate your time again,.!
Thanks
Neeraj
Hello Neeraj,
I think that the future of finance is very much in private wealth management and individual advising. The skills that you seem to want to use most are in analysis. Venture capital will always be a relevant industry for analysts because they fulfill an important function. Behavioral finance is not yet a separate role at the overwhelmingly majority of firms. I think one role that does not exist but where there is large opportunity is in performance measurement (i.e. CIPM) coupled with portfolio analysis. In other words, there is a role for the person who can work proactively with portfolio managers to evaluate their performance, note where the manager has done well and well she has done poorly, then make recommendations for how to improve that performance. In other words, they serve in a counseling capacity.
I hope this helps!
Jason
Hello Jason,
I was wondering if you could expand on your daily routine when you were an equity analyst. Maybe a post on a typical day of an equity analyst? i.e:
- wake up at 6:00am...catch up on news
Also, is it possible to touch on certain setups/tools/data source/process that you stuck with? Or at least the basics that you think are MUST for inspiring or amateur investor i.e:
- excel, access, vba, computer programming?
- news subscription (FT, WSJ) vs free source (bloomberg, reuters)
- computer (mac vs pc, laptop vs desktop, both)/doesn't matter
- stock screeners?
Thanks in advance! Because I have no experience, it's hard to imagine and grasp the routines and daily grunt of an equity analyst.
Hi Dannie,
What a great suggestion for an article...consider it done. You will see such a post on The Enterprising Investor in the next 4-8 weeks. I will give you credit for the suggestion, too.
As for the other questions...I am happy to answer for how I did my work. However, what I consider to be PARAMOUNT is to experiment with many different tools and news sources. Why? What matters is your mind. Different minds call on different memories, knowledge, mental models, and so forth. Therefore, the tools must exalt the individual's consciousness, as opposed to the consciousness exalting the tools. So I offer up my thoughts on this subject cautiously. This is the stuff I used...you WILL use different tools if you are aware of the ways that your mind works - and that (i.e. self-awareness) is much more important.
Here are the tools I used, mapped to your framework:
- excel, access, vba, computer programming? Excel, yes; I consider myself to be an Excel master. Want a tip? Learn the keyboard shortcuts as you can sextuple to septuple your productivity with Excel. Want another tip? Get an Excel Worksheet Function book and continually peruse it so you learn what is possible to do with Excel. Want another tip? Yes, take a computer programming class so that you understand how to use worksheet functions in a way that speaks the language of computers. VBA? A wee bit. My spreadsheets tended to be custom-made for each business I examined...but more on this in another blogpost. Access? No, I tried to learn it multiple times, but my process was not intensive enough to require a database's functionality. I used Excel as my clunky database. Want a final tip on this section of your question? You might want to learn Matlab, which many analysts, including my successor whom I hired, use. You also might want to learn a stat package like SPSS.
- news subscription (FT, WSJ) vs free source (bloomberg, reuters)? At the Davis Funds I had a WSJ subscription, but not an FT subscription. I read about 35-40 news sources per day. We had a Bloomberg terminal which was used sparingly, and FactSet, too. But one of my top secret weapons, and no longer available as it was absorbed into the vast AOL edifice, was Relegence. But for my model building I (and I CANNOT EMPHASIZE THIS ENOUGH) used ONLY primary data sources. I NEVER read sell-side or third party analysts research...we are talking maybe once every two years would I read an analyst's report. I only read reports if: I was looking at a complex business and wanted to see what factors seemed to be important, or, and more often, to understand what ignorance an analyst was peddling to the Street and that was negatively affecting my suite of businesses (i.e. my portfolio).
- computer (mac vs pc, laptop vs desktop, both)/doesn’t matter? I have owned both PC and Mac and I prefer PC, especially for finance. Why? Mac's version of Excel didn't used to support keyboard shortcuts so you had to laboriously use the mouse to execute commands. #pathetic. I once taught a young man in the secrets of my analytical methods and he used a Mac and it took him literally many hours longer to do what I was doing with keyboard shortcuts. By the way, I should give props to Javier Sanchez my fellow research analyst when I started at the Davis Funds for insisting I learn the shortcuts. Thank you Javier. I would argue that this allowed me to add a year of productivity on to my career. That kind of WOW is difficult to come by in the investment business.
- stock screeners? I never used a formal screener...meaning someone else's off-the-shelf package. Instead I used a simple PEG ratio once a quarter to sort the entirety of US stock listings. But this was just to get an idea list going. This maybe generated 2 ideas that were actually bought into the fund in the whole length of my career. In other words, screeners were not a big part of what I did. By the way, if I had it to do over again I would never use the PEG ratio. Why? Check out the article I wrote for the Journal of Private Equity about the Fallacy of the PEG Ratio...they are very, very unreliable.
I hope this helps!
Jason
Thanks Jason.
I can't wait to read your new article!
Hi Jason,
Thanks for significant input.!
We will be keep bothering you with some more clarity...:)
Thanks
Neeraj