Getting a job on the buy side is easy. All you need to do is graduate at the top of your class at Harvard, Stanford, or Wharton, or have a parent that runs a hedge fund. If you fall into any of those categories, stop reading now because you’re probably already there and don’t need tips on how to get a job on the buy side.
But for those of you that don’t have that background, fear not! You can still get there, but it takes a little more time and effort. There are a million ways to get a job on the buy side, but I only have insight into one of them, and it’s a pretty common route. The two most common stepping stones into a buy side job is investment banking or equity research. Research was more interesting for me (along with not working 120 hours per week), so you can guess which route I took.
Getting Your MBA and CFA
I graduated as an engineer and only fell in love with the markets after I started working. It would have been extremely difficult to make the transition from engineer to equity research associate, so I got an MBA first. Before getting my MBA, I was also working on my CFA. It’s easy to say you want to get into research, but spending three years of your life getting a CFA demonstrates that you actually mean it. This helped separate me from others when I was applying for jobs after business school.
I’ve been asked which is more important: an MBA or a CFA? To be honest, I needed both. I didn’t know anything about strategy or finance beforehand, and I learned a lot about these during business school. The CFA taught me a lot about financial analysis. So both were necessary to make me a better analyst and stock picker.
Sell Side Equity Research
Getting a sell side equity research job isn’t easy, but it’s a piece of cake compared to getting a buy side job. For both a sell side and buy side job, you need to hone your stock pitch. There are so many sell side research shops out there and they need associates to build models and write notes. There are fewer shops now, but churn is still pretty high on the sell side, which creates openings.
To be an associate, you want to demonstrate attention to detail (since the senior analyst isn’t go to do any modeling work), the ability to write well (since the senior analyst isn’t going to write anything), and enthusiasm (since the senior analyst will want you to stay late modeling and writing notes). Ideally, you’ll find a sell side job at a bulge bracket, but beggars can’t be choosers. You can always start at a smaller shop and work your way up to a bulge bracket. This is what I did.
Chicken or the Egg?
Once on the sell side, this is where most people get stuck in their quest to get to the buy side. When I was on the sell side, recruiters would send me sell side opportunities, but whenever we talked about buy side opportunities, it was always, “Sorry, the position requires buy side experience.” Uhh, how am I supposed to get buy side experience if everybody requires it to get a buy side job???
How to Differentiate Yourself
Again, most people are able to get a job on the sell side, but are then unable to make the transition to the buy side. It’s not for lack of trying. I’ve had many smart friends try to make the jump, but were never successful.
The problem comes back to the chicken or the egg? People want you to have buy side experience, but you can’t get buy side experience until somebody hires you. Like I said before, it’s not about intelligence. I know many people smarter than me that couldn’t make the transition. What they lacked was networking.
On the sell side, you’ll focus on 10-20 companies. On the buy side, I look at closer to 100 names. So you should have an information advantage on the sell side. It’s this information advantage that you’re going to use to help you network.
Networking, Networking, Networking
When you’re a research associate, you’ll want to network with as many people as you can on the buy side. And a research associate job is perfect for networking because buy side analysts come to you for information!
You want to update them with important information about companies they’re interested in. Like newly announced deals, or comments from recent management meetings, or changes to drivers that impact revenue. People on the buy side are busy, so helping them keep on top of news is helpful. Send concise emails or call them. This is really important because when there is an opening at a buy side shop, people on the buy side will see it first. The hope is that they’ll think of you when they see an opening. A recommendation from a buy side analyst will give you a leg up from other candidates.
Don’t update people with unimportant information, like your earnings preview that’s in line with consensus. If you’re bothering people with unimportant information, nobody is going to take you seriously.
What If My Senior Analyst Doesn’t Let Me Speak with Clients?
The senior analyst will focus most of his time on the largest, most profitable customers. So offer to speak with lower tier clients. This is a win/win because it increases the vote for him in II (Institutional Investor), yet you take the workload off him. If your senior analyst won’t let you speak with any clients whatsoever, run away as fast as you can. You’ll never be effective as an analyst on the buy side or the sell side without speaking with others. And this just proves that your senior analyst has no interest in your own personal development.
How to Use LinkedIn
Using LinkedIn to connect with people you’ve met, both on the sell side, or the buy side, is a smart idea. What isn’t a great idea is trying to connect with people you don’t even know. I think the app you’re looking for instead is called Tinder. It’s not about number of connections. It’s about quality.
That First Buy Side Job
All of us have that ideal buy side job in our heads. If that’s the job you land, good for you! If it’s not, don’t worry about it too much. Because when you land that first buy side job, everything about recruiting changes. Nobody can ever say that you don’t have buy side experience. When I landed my first buy side role, I had recruiters calling me the next month, talking about opportunities that they didn’t think I was qualified for a month ago. What changed in that month? A buy side shop thought that I was good enough, and that made all the difference. So focus on getting that first buy side job, then worry about moving to your ideal firm.
If you’re looking to get to the buy side, good luck! You’ll likely experience many failures on the way. But remember the sure way to not get what you want is by giving up. Also, you only need one person to believe in you.