If you want to work in equity research, you can't be afraid to have an opinion. As a sellside analyst I have realized that clients pay for an opinion, for information and analyses they can trade on.
What does an associate researcher do? Day to day it's a question of working pricing models, keeping up with company earnings, conducting channel checks within the industry and making informed projections about the future.
Sanford Bernstein's also got a reputation for producing informative primers on the financial services sector for people not fully conversant with the industry. We've recently published pieces on the prime brokerage and energy trading sectors, and are just completing one on institutional equities. We've been talking to heads of institutional equities at firms around the Street in order to better understand each firm's business model and the competitive forces they are dealing with.
I've been in this role for a little over a year. My route was rather unconventional: most banking associates come straight from earning an MBA; I took a detour via the trading floor at Goldman Sachs and the Home Depot in New Jersey.
My professional career began in 1987 when I graduated from the U.S. Naval Academy and joined the Marines. During the next 12 years I progressed from the rank of Lieutenant to Major and served in a variety of positions beginning in infantry and reconnaissance units and culminating with my role as a battalion executive officer, second in command of more than 1,100 Marines. During my career, I traveled the globe, spending considerable time in Southeast and Southwest Asia and participated in the first Gulf War as a reconnaissance platoon commander.
When people ask what I got from the experience, I can point to plenty of positives. First of all I learned about myself - my strengths and weaknesses, and as importantly I learned leadership skills. I learned to make judgment calls, to have the integrity to stand by my decisions, and to make decisions quickly. I also learned a lot about mentoring younger people: as a company commander I was everything from a marriage counselor to a financial advisor and meter out of punishments.
If I hadn't been a marine I do not believe I'd have been nearly as successful in life. But after twelve years, I needed a change. I had a young family and was facing the prospects of positions tied to recruiting and administration - not what I had joined the Marines for. I looked at peers who had left the service and how successful they'd been, and decided it was time for a new phase in my professional development.
From MBA to Goldman
In 1999 I went to The Tuck School at Dartmouth College to earn an MBA. I had planned to go into consulting, but quickly realized that my skills and personality were better suited to sales and trading. In 2001, I accepted an offer to trade equity securities at Goldman Sachs and based my decision on Goldman's reputation and the strong Tuck alumni network.
When I began at Goldman the firm was already beginning to downsize. Like most other Wall Street banks at that time, it had over-hired. Of the eight grad students hired from my internship class, only one remains at Goldman and not in a trading role.
I began trading listed securities and later transitioned to NASDAQ technology securities. After September 11, 2001, volumes were depressed and there was a lot of confusion about what was going to happen; it was a tough environment and there were several rounds of layoffs. My own career as a trader came to an end in November 2002, during the fourth round of reductions.
The great thing about Goldman was that as a junior trader I was given a lot of responsibility: I was able to handle some large transactions learned quickly. In my last memorable trade at Goldman Sachs I handled a 17.5 million share order. I worked flat out for over two weeks, but I earned very little profit for the firm due to step-outs and lower negotiated commissions. That large order served to underscore my current opinion that electronic exchanges are the future and cash traders were no longer critical to the majority of the daily equity trading volume.
When I was laid off, Goldman was extremely fair. They knew I had a family and handled it with a lot of class. I have a lot of respect for that. After I left Goldman, it took four months to get two offers of new trading roles - one on the buyside and one on the sellside. But I didn't see a great future there.
Home Depot... Huh?
I looked around for other options. Home Depot, the household store, had a program for turning former military service people with MBAs into store managers and I decided to give it a try. I began as an assistant manager and went from trading shares to opening and closing the store. As a former Marine, I didn't feel the responsibilities were beneath me, but I did start to think my education had equipped me for something more.
As I began to search for a position that better suited my education, I let a good friend from Dartmouth who worked here at Sanford Bernstein know that I was interested in returning to finance. He introduced me to Brad Hintz, the senior banking analyst here, and the rest is history.
I benefited from a confluence of fortunate circumstances. I'm definitely older than your average associate, and hiring me could have been viewed as something of a risk. But Brad's older than the average analyst and is a former Naval officer who had served in Vietnam himself. We thought alike, had similar experiences and needed what each other was offering (me, much more so than Brad). He gave me an opportunity - I think he likes the fact that I exhibit good judgment, that I am not afraid to speak my mind and that I can double as a bodyguard when needed (ok, he likes my sense of humor).
If you're looking for a job on Wall Street, my best advice is not to give up. I was very lucky: I knocked on one door and I got in. But there are plenty of other people who've knocked on hundreds of doors before they found the right one. Even if it takes a while, don't say 'It's too difficult', or 'I'm too old.' I'm proof positive that there's a position for everyone!
Where next? Well, that's a difficult one - I've only been here for a year. I could become a lead analyst at Sanford Bernstein, perhaps in a small sector like asset management. Or I could join an asset manager, a hedge fund, or a private equity fund. I don't think there's much of a future in trading, at least not for many traders, but I believe that there will always be a place for high quality research.