How Do I Become a Wall Street Equities Analyst?
Do you dream of becoming an equities analyst for a top Wall Street firm? If so, join the club. Literally thousands of applicants apply for each internship and entry-level analyst position at such leading investment banks as Goldman Sachs, Merrill Lynch and Morgan Stanley.
Equities analysts provide in-depth analytical reports on the performance of companies within a particular business sector or for an entire industry. They're expected to spot trends and report developments that investors can use to decide which stocks to buy, hold or sell.
The surest path to landing one of these positions is to attend one of two dozen or so highly selective universities, major in finance, graduate at the top of your class and then impress the investment bank recruiters who visit your campus in the fall to fill the seats in the following year's analyst program.
What if you didn't attend a top school? Your path to Wall Street will be much less certain, but that doesn't mean you can't get there from where you are. Here are some strategies:
Work Your Network
With so many candidates for each position, networking is critical to stand out.
"If you study finance at a non-top-25 school, it's a difficult path," explains Peter Arian, an executive recruiter for Analytic Recruiting in New York City. "You've got to be proactive and really network, knocking on doors and hitting the pavement.
Find connections to Wall Street. Mine your school's alumni database to find graduates who now work at the firms you're targeting. Call and ask if they'll help push your resume. Ask everyone else you know if they have a connection. After all, even if your uncle doesn't work on Wall Street, he may know someone who knows someone who does.
If you're still a student, take advantage of summer internships, which can lead to a permanent job. Minorities and women can also apply to these summer programs:
- Sponsors for Educational Opportunity places African American, Asian American, American Indian and Hispanic/Latino college students in investment banking summer internships in New York, San Francisco and Hong Kong.
- Credit Suisse First Boston runs a three-day Explorer Program seminar for African American, American Indian and Hispanic/Latino college students.
- The Wall Street Exchange, sponsored by the Financial Women's Association, augments the summer internships of female students between their junior and senior years with a workshop series designed to improve their job search skills.
Leverage a Specialty
Equities analysts cover a particular field such as oil, telecommunications or auto manufacturing. Experience in the field you'd like to analyze can be another way in, Arian says.
We've placed people who were medical doctors in equity research covering medical device companies, he explains. [As doctors], their product knowledge, fundamental understanding of the industry and their ability to talk to management at the companies they're covering add insight.
Leverage Go to a Top MBA Program
Without specialized knowledge or an inside connection, your chances of landing an equities analyst position on Wall Street are slim. If you don't make the cut during the recruiting season the fall before college graduation, your next best shot is to work at a Fortune 100 firm for three years in finance or accounting roles of increasing responsibility, then go to a top MBA program and try to get in at the next level -- as an associate with a graduate degree.
Wall Street recruits associates from about two dozen graduate schools. Many investment banks post their recruitment schedules on their Web sites, so check there to see which schools they visit.
Look Outside Manhattan
If you're willing to work outside the Manhattan area, you'll find somewhat less competition.
An investment firm in Bismarck, North Dakota, can't command the same talent, because New York is the mecca of finance in the US, Arian says. Investment analysts prefer to work in New York, because the high number of jobs there makes it easier for them to transfer from one company to another without relocating.
Wall Street (sell-side) research was forever changed by the Spitzer settlement, Sarbanes-Oxley and various rules changes by the National Association of Securities Dealers, the New York Stock Exchange and the US Securities and Exchange Commission, says Jeffrey Evans, CFA, a former Wall Street equities analyst.
Those changes not only severed the connection between investment banking and research but also drove commissions lower. The result is fewer jobs, lower pay and dimmer long-term career prospects, says Evans, managing principal of the Career Resources Consortium in New York City. Wall Street equity research can be part of a rewarding and satisfying career, but anyone starting down that path should be prepared to make changes along the way.