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.
I don’t think they’re necessarily mutually exclusive. I’ve seen similar websites and while I can’t comment on how effective they are in landing interviews / jobs, would it be possible to adjust the amount of work you dedicate towards your website so that you can accommodate CFA L3? If equity research is your eventual goal CFA is indeed quite relevant.
@MockTurtle Wow, that is quite impressive, my friend. That actually gives me a great deal of optimism because as of right now, the only demands I have in my life right now are work and some dental work I need to address. Oh and a wedding in Japan during a week in February. While I’m definitely going to prioritize my level III studies, I’m confident that I’ll be able to devote part of my time to my website/modelling skills. Thank you for the vote of confidence!
@kungpow9960 thanks for the input! lol and good tie in with the Wall Street reference.
I’ve just started the Wall Street Prep course and plan on completing at least one research report/valuation model to post on my website before I start studying for level III in early November!
Again, thank you so much for your post :smiley:
@mattyc That is great advice! I’ll definitely need to be able to speak, in-depth, to at least a few companies that I should know inside and out. And good call on publicizing my predictions online. I’ll have to find a way to put my analysis on display but use a bit of tact in making my predictions. And keep up the good work! It sounds like you are on the cusp of making that breakthrough in your own journey.
@DollarsToDonuts – I actually don’t think creating a website and doing all those extra work is going to contribute much in interviews. There may be a better way to demonstrate financial modelling experience. My view is to go for the CFA exams first and focus on interviewing on the side.
What do you currently do? Is there financial modelling work involved (although a different line of work) – these skills are transferable and excel modelling skills can be learned online, Training the Street is a great example. Once you’ve taken a good course like this, it’s good to practice them at work when you have the opportunity (and are not bound by crazy deadlines). Use such examples of ACTUAL work experience in your interviews, it is a stronger case to say you actually have done it before at work, than just work on it on your spare time (well we CFA candidates rarely have any) which may not be as top quality as you’d like it to be. Plus, you risk the interviewer not bothering to check it before the interview at all. But if you’ve experience doing it yourself at work (say you may make a work task more complicated than it should be but it’s a good practice to build a simple model and timing isn’t too tight), you know this and can discuss confidently about what you’ve done if asked in interviews.
Financial modelling skill is one thing, but the ability to understand financial statement and the implications on your valuation is more important. Financial modelling skill is the easy part, the industry knowledge, analytical aspects of understanding financial statements is WAY more important to an equity research role. Anyone can learn financial modelling, but e.g. how does one understand a sector specific (e.g. insurance companies) financial statements? What does an airplane disaster mean (say MH17 / MH370) to an insurer who took on the risk? How do you adjust your valuation model and your view of the company if the key management leaves? These analytical basics (not the industry knowledge as it depends what sector you are aiming for in equity research) are what you are picking up in CFA, and this is where you steer the interview in how awesome you are in your CFA exams and how determined you are to complete it!
That’s a good point. I tend to have a one-track
mind when it comes to these things. The more feedback I get, and the more I
think about it, I think some type of mix between the two is in order. Something
like spending a few hours a week building my website, but definitely
prioritizing passing level III this coming year. Then once I pass (fingers
crossed), I can switch gears and focus on making my move. But I think you’re
right, having that designation next to my name when I start applying will be
I’m currently a results analyst for Capital
Group in Los Angeles. Unfortunately, there’s no financial modelling work
involved as it is a performance measurement role, which makes it all the more
difficult to make the switch. I totally agree with you that real, on-the-job
experience would be best, but my current role doesn’t really offer anything in
the way of that. Which is why I thought about taking the website route. I am,
however, currently partaking in Wall Street Prep’s online course.
You provide some very valuable insight on the analytical basics picked
up in the CFA program, but I just wonder if that’ll be enough to steer the
ship. Besides the CFA and this website idea, I suppose I just need to do my
best to keep networking as well.
I would agree with what @christine and @Sophie said. I think you would be far better served passing Level III and getting your charter at this point than spending lots of hours on a website. Finishing the CFA Program will demonstrate a passion for investing as well as motivation/drive, and ability. Plus it shows you can learn on your own and on the fly. All of which will be important because entry level research jobs involve a lot of heavy lifting, so to speak. You can use the charter to deflect concerns about your lack of direct modelling experience, but that’s a different posting, I think.
That being said, I think developing a website where you post models and stock theses, etc., will also be useful in moving from the back office track you’re on now to a more middle office role. The reason I say that is it shows initiative and passion again. The website can serve the role of a photographer’s portfolio: something that showcases your work for potential employers to see. However this should complement examples of how you have used your technical and analytical skills in your current role. Unlike the movies, there are few Gordon Gecko’s hiring Bud Foxes based on little more than a website with good models (or tips about airline union negotiations!). But it would be an interesting differentiator and something you can highlight in your interviews when you have them.
So maybe work on the website until you start studying for Level III and then get that charter!
@DollarsToDonuts I’m a bit late to the discussion, but I actually read your post several days ago. I work in performance measurement too! Like you, I too want to build my quantitative skills so I’m doing a free course online for the moment, to learn some of the basics.
When I prepared for Level III I started around September or so, went through a hugely disruptive and stressful home renovation project, a short holiday in December, then Christmas with the in-laws, then another short holiday in March, all the while job-hunting and preparing for interviews, all on top of my full-time job. I moved to London for a new job on 5th May, one month before the exam date! And I still managed to find time to fit in studying (thought not very well or very methodically) and I’m very happy and relieved to say that I passed L3.
This is not to brag, but to point out that if you’ve got a plan or schedule, then it can be done. Of course, I don’t know what your personal situation is like, but if you don’t have care-giving responsibilities, then building your website and working on modelling skills can be done along with studying for the CFA. Good luck with everything.
I’m afraid I have to disagree with @kungpow9960 . After spending a couple of years trying to break into the financial industry, the feedback that I’ve got was pretty similar. CFA qualifications would NOT help in getting you a research role, unless you know someone higher up who could highly recommend you. CFA would help a lot if you have prior relevant experience. There are few HR managers who actually told me to setup a financial blog/website, writing analyst reports on stocks to show your passion in the industry, I find this a little disturbing as they seem to completely disregard the effort you put into CFA exams. Why would someone spent 2-4 years on a qualification if they don’t even have the passion?
Also, what I’ve seen effective are people with ACA qualifications, without prior experiences in research they are highly sought after compared to CFA.
Those are just my findings over the past 2 years but again it may be different to others.
I was in a similar quandry @dollarstodonuts. I was originally in Commercial Banking on the lending side and 6 years ago I decided I watned to move into Finance although I was not sure in what capacity. I got my MBA and a month after my graduation I accepted a job with one of the global wirehouses in private wealth management. It allowed me to leverage my banking contacts, remain in relationship management but transistion into finance where my passion resided. I originally looked at this role as a stepping stone and I started my CFA journey a year later looking for another credential to compensate for my lack of experience. Im currently a L3 candidate I feel like the roles that I have coveted are finally starting to recognize me as a legitamate candidate. I was also able to get 3+ years of eligible work experience in the meantime.
My advice to you is do not put off the CFA studies becuase that is a tangible accomplishment that can be quantified by hiring managers. Try to network with financial recruiters and be honest about what you’re looking for and why you would be great at it. Look at the website as a pet project but also religiously track a few stocks or a sector and be able to say at a drop of a hat everything about that company and why you feel it is over/undervalued. Be wary of putting projections and predictions online becuase if you’re wrong that could become more of a hinderance. Good luck.
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