Engineers breaking into ER/IBD - 2017 Perspective

[89coupe]

My brother-in-law went from an engineering roll to securities banking, he obtained his Masters as well though.

Currently in a Vice President roll at TD Securities.

[R154]

Originally posted by 89coupe
My brother-in-law went from an engineering roll to securities banking, he obtained his Masters as well though.

Currently in a Vice Presient roll at TD Securities.

I heard he is going to role on over to another prescient next month. Catch them grammar & spelling Nazis.

The irony is I fuck up nearly every one of my posts in a similar mannor.

No one answered my question about what the actual job is?? I'm curious to know what takes so much time? Is it a lot of reading and making complicated spreadsheets?

[89coupe]

Originally posted by R154


I heard he is going to role on over to another prescient next month. Catch them grammar & spelling Nazis.

The irony is I fuck up nearly every one of my posts in a similar mannor.

No one answered my question about what the actual job is?? I'm curious to know what takes so much time? Is it a lot of reading and making complicated spreadsheets?

Fucking iPhone auto correct, haha. I hate it!

I have no idea what it entails.

I hate being corrected, especially by a fucking phone.

Good luck with your pursuit.

[R154]

Oh man. I can't make an error free post to save my life. 99% if my posts are from my phone.

Yeah, I could never be in finance. I am definitely a design centric individual.

I have a tough enough time staying interested in my personal finances let alone a proficiency with someone else's money split over a hundred hours a week. Nah, I'd ruin a company or 10.

Trading would be really interesting though.

[Marsh]

Originally posted by R154


I heard he is going to role on over to another prescient next month. Catch them grammar & spelling Nazis.

The irony is I fuck up nearly every one of my posts in a similar mannor.

No one answered my question about what the actual job is?? I'm curious to know what takes so much time? Is it a lot of reading and making complicated spreadsheets?

The job is basically doing all the financial modelling for potential deals, as well as preparing the pitchbooks. The reason the hours are stupid is that during the 9-5, the Managing directors and others are meeting with clients all day and pitching them deals. Then when they get back to the office at 5, they pass on the work that needs to be done (ie. model potential acquisition of so and so company, and prepare pitchbook). So the analysts/associates start doing this in the evening and night, sending out what they've done and getting emails back about things that need to be fixed, fortmatted etc. A lot of it is petty revisions, but that's basically what they do. This is assuming they do not have a "live deal" to work on. If there is a live deal happening, then for a few days the analyst are going to be pulling close to all nighters.

I have a friend at BMO that works as an associate, and he says they have about 40-50 pitchbooks and models in rotation constantly on client companies, as well as creating new ones for new potential deals.

tldr: Higher ups source deals during day, analyst/associates do grunt work at all hours to support deal sourcing.

[Buster]

Originally posted by R154
Oh man. I can't make an error free post to save my life. 99% if my posts are from my phone.

Yeah, I could never be in finance. I am definitely a design centric individual.

I have a tough enough time staying interested in my personal finances let alone a proficiency with someone else's money split over a hundred hours a week. Nah, I'd ruin a company or 10.

Trading would be really interesting though.

You'd be surprised how many professional "finance" people aren't super proficient at personal finance stuff.

Relatively speaking, I suck at personal finance stuff. (Part of it, is that it's hard for me to justify spending a bunch of time on it, when I can make money spending that time doing something else. In other words, sub-optimal personal finance planning is more efficient than the alternative.) They're just different skills. I'm a lot more comfortable modeling cash flows on a corporation, than I am sitting down with my own money. Most banker types are also "revenue" focused people rather than "expense management" focused people. To put it delicately.

Also, a lot of the traders I know keep their earnings in very low risk portfolios, since their day-job involves constantly managing risk. Last thing you want to do

[R154]

Originally posted by Marsh


The job is basically doing all the financial modelling for potential deals, as well as preparing the pitchbooks. The reason the hours are stupid is that during the 9-5, the Managing directors and others are meeting with clients all day and pitching them deals. Then when they get back to the office at 5, they pass on the work that needs to be done (ie. model potential acquisition of so and so company, and prepare pitchbook). So the analysts/associates start doing this in the evening and night, sending out what they've done and getting emails back about things that need to be fixed, fortmatted etc. A lot of it is petty revisions, but that's basically what they do. This is assuming they do not have a "live deal" to work on. If there is a live deal happening, then for a few days the analyst are going to be pulling close to all nighters.

I have a friend at BMO that works as an associate, and he says they have about 40-50 pitchbooks and models in rotation constantly on client companies, as well as creating new ones for new potential deals.

tldr: Higher ups source deals during day, analyst/associates do grunt work at all hours to support deal sourcing.

Thank you very much for that. I completely understand how those hours build up. I have to admit, that I think it would be a bit of a meat grinder, that. I would be turned into human mousse within a week. That stress level would be on par with a law associate (according to suits).

Sounds like a young man's game. I can't see my wife putting up with that for 5-8 years of our young working life. Imagine if you have kids...

Originally posted by Buster


You'd be surprised how many professional "finance" people aren't super proficient at personal finance stuff.

Relatively speaking, I suck at personal finance stuff. (Part of it, is that it's hard for me to justify spending a bunch of time on it, when I can make money spending that time doing something else. In other words, sub-optimal personal finance planning is more efficient than the alternative.) They're just different skills. I'm a lot more comfortable modeling cash flows on a corporation, than I am sitting down with my own money. Most banker types are also "revenue" focused people rather than "expense management" focused people. To put it delicately.

Also, a lot of the traders I know keep their earnings in very low risk portfolios, since their day-job involves constantly managing risk. Last thing you want to do

Thanks for the shining endorsement. I can assure you that my experience in financial responsibility leads me to cars and car parts. I'm not an innately financially minded guy like my brother is. This strikes me as a career path you're born to do. I'm sure you can "fall in to" it, however, someone with a gut sense about these things would probably be the guy rising to partner.

[Buster]

Originally posted by R154



Thanks for the shining endorsement. I can assure you that my experience in financial responsibility leads me to cars and car parts.

Not sure what you mean?

[R154]

Originally posted by Buster


Not sure what you mean?

I meant that entirely sincerely. Thanks for thinking I would be capable of that type of job. There is no way.

I contest that I am not capable. If my brother didn't force me to budget properly I'd be renting a room in Dover trying to park my used Gallardo on the street. (I don't have a Gallardo, neither should any of us if we care about our financial wellbeing, except Jordan and newlextacy).

I just put money down on a toy with there being a real possibility that I could be out of work before I pay it off.

I'm a financial idiot. They should have never given me credit or money.

[Buster]

Originally posted by R154


I meant that entirely sincerely. Thanks for thinking I would be capable of that type of job. There is no way.

I contest that I am not capable. If my brother didn't force me to budget properly I'd be renting a room in Dover trying to park my used Gallardo on the street. (I don't have a Gallardo, neither should any of us if we care about our financial wellbeing, except Jordan and newlextacy).

I just put money down on a toy with there being a real possibility that I could be out of work before I pay it off.

I'm a financial idiot. They should have never given me credit or money.

ah.

I thought I offended you or something, which definitely wasnt what I was trying to do.

[R154]

Haha, never.

[Super_Geo]

I made the switch from engineering to finance. Here are some thoughts:

Equity Research
Loves engineers, but likely a lower pay ceiling than IB/A&D/S&T due to the fact that it is a cost center now with no direct profit generation at the big banks (ER used to get a cut of IB and S&T profits, but they are starting to silo ER in its own division). Most people in the industry don't take research reports that seriously, except from a handful of analysts who have great track records. Hours are manageable outside of reporting season, and you build a very good skill set and meet a lot of senior management at the companies you cover. CFA would be necessary to make the switch. Excellent exit opportunities. CFA > MBA.

Acquisitions & Divestitures
Probably the most natural path for engineers. Should be able to start as an associate if you have experience that matches up. Always answering to IB's needs, and can be treated like second class citizens if the people in IB are dicks. Called upon for reserves modelling, asset valuation, etc. Very good exit opportunities to go back to E&Ps with, either in business development or internal A&D. Pay is likely better than ER, but short of IB. Hours aren't as bad as IB. CFA > MBA, but neither are critical.

Investment Banking
Not a huge need for an engineering background. Not very common path from engineering w/o an MBA. As has been covered by others in above posts, a lot of the work at the analyst/associate roles is excel/powerpoint grunt work to pitch decks and updating comps so that ideas can be pitched to potential clients. Infamous for the number of hours, but stress comes from sheer volume of work, tight deadlines, attention to detail, etc. and not from costly decisions that lose money (at least at the more junior levels). Perhaps the most broad exit opportunities. Anecdotally, a lot of the people in IB see it more as a stepping stone vs being a career banker, and it's the easiest to burn out from. MBA > CFA.

Sales & Trading
Engineers have an easier route to trading than sales. Potentially the best hours wise, and much more of a meritocracy than investment banking, which is very hierarchical. So in that sense, very easy to climb the ranks quickly if you can prove yourself. In Calgary, it's all commodities trading (oil, nat gas, power) and little to no equities trading, which takes place in TO or NY.

Sales: establish relationships/onboard corporate clients, then pitch trading/hedge ideas to them. Bring in trading business and tack on a sales commission onto the trade, which can vary depending on the size of the trade and the sophistication of your client. Trading commission can range from $100 on a small trade to $1MM+ on a big trade. MBA > CFA.

Trading: Make markets for the sales guys to show their clients, and then inventory and manage the resulting risk from those trades. There isn't as big a focus on proprietary trading (speculative trading) these days with all the new banking regulations in the US, but being outside the US, there is still risk taking going on depending on which shop you're at. CFA > MBA.

Rough payscale below. Base salaries should be pretty close, and the bonus range are for normal years, but of course if the stars align the bonus numbers can overshoot by a large margin, or they can be 0 on a bad year.

Analyst: 70-100k base, 20-50k bonus
Associate: 80-110k base, 25-150k bonus
VP: 110-160k base, 50-250k bonus
Director: 120-200k base, 75-350k bonus with significant upside outliers
MD: 150-300k base, 100-500k bonus with significant upside outliers

Analyst -> Associate: 2-4 yrs
Associate -> VP: 2-4 yrs
VP -> Director: 3-8yrs (some people max out at VP and never move up)
Director -> MD: 3-???yrs (some people max out at Director and never move up)

[Super_Geo]

A few Resources:

CFA Jobline: check often for finance postings

Wall Street Oasis: Sure, there are a lot of college kids who have no idea what they're talking about on there, but there are also quite a few knowledgeable people in the industry on there who post good info.

Matt Levine on Bloomberg: great articles on all things finance. Very knowledgeable and great writing style. I'd recommend reading every article on here.


CFA: I'd recommend signing up to write Level 1. Having it on your resume instantly puts you on better footing than people w/o it. Probably don't need to get level 2 or 3.

MBA: Helps for IB, can't hurt for the others, but a pretty big investment both on both time and money.

In my opinion, the most important and easiest thing to self-learn:
VBA
You have no idea how much of modern finance runs on Excel. Everyone has tedious workflow, and having someone join the team that doesn't know shit about the business but knows VBA means they can still automate your workflow. Learn it and get really, really good at it, and then pitch the shit out of it. Because truthfully, there is likely very little transferable knowledge from engineering, and they'll know that... but knowing you can automate grunt work is valuable to any team.

[killramos]

Thanks for all that. Really good info.

I have been spending some free time on some of the WSO excel guides etc. and will look into the VBA side of things. Not a bad skill to develop in any case. Been a while since I coded literally anything though.

Doing CFA level one in any case though? Didn't really think of that. You think there is any value to a CFA on top of MBA?

[Super_Geo]

Having an MBA and L1 CFA would make your resume stand out. Whether or not the incremental benefit once you're on the job is worth all the incremental effort is another question... but I think from your current position, anything you can do stand out is good.

Or, you could finish your MBA, and just write 'CFA Level 1 Candidate - June 2017' without actually signing up to write it... if you get the job, sign up and write, and if you don't then change it to 'CFA Level 1 Candidate - December 2017.' Rinse and repeat

From the CFA Jobline website, here is a IB analyst/associate opening at RBC. One of the better shops in town for IB due to their size and volume of deal flow. The hours, however, are also one of the worst.
LINK

[argent]

Ha.. very interesting strategy… :p
Though, just a thought (feel free to disregard).. this is technically violate CFA ethical standard… u can call yourself a candidate but you need to sign up to write the exam. If you don’t then that would be an (obvious) lie. Just saying.

Originally posted by Super_Geo
Having an MBA and L1 CFA would make your resume stand out. Whether or not the incremental benefit once you're on the job is worth all the incremental effort is another question... but I think from your current position, anything you can do stand out is good.

Or, you could finish your MBA, and just write 'CFA Level 1 Candidate - June 2017' without actually signing up to write it... if you get the job, sign up and write, and if you don't then change it to 'CFA Level 1 Candidate - December 2017.' Rinse and repeat

From the CFA Jobline website, here is a IB analyst/associate opening at RBC. One of the better shops in town for IB due to their size and volume of deal flow. The hours, however, are also one of the worst.
LINK