Simply put, getting an interview is hard enough as it is so we believe it is best to avoid the most common pitfalls sooner rather than later. We’ve personally interviewed candidates from all walks of life, industry candidates, undergraduates, MBAs, target school candidates, non-target schools and graduate students with PHDs. Luckily we ask the same 3 questions in every single interview to weed out the ones that don’t go to round 2 from a single phone call. All of these candidates fail the following 3 questions repeatedly.
Why Do You Want to Do Research? Translation: Do you know what Research is? We’ve had candidates talk about work done in investment banking, portfolio management, sales and trading and even regression analysis on data mining. Simply put none of these answers address research and some are even so mixed up we have to explain what the job entails. Below is a structure to the correct answer:
“I want to do research because I enjoy following XYZ stocks in XYZ sector that you cover. I may be wrong but I believe XYZ will happen with XYZ stock/sector over the next 12 months. I know that the job is quite stressful during market hours but I enjoy following the sector and currently believe XYZ stock is a great pick, I believe the job will allow me to better understand the space and give me exposure to the daily workings of the stock market”
In this answer you have told the interview multiple things “I may be wrong” implies you are willing to learn if the interviewer thinks you’re entirely off base, two by mentioning the “next 12 months” implies you understand that’s how ratings are made, three “stressful market hours” implies you understand that during these hours you must be on your toes, finally “better” understand the space implies you are already trying to learn. All of this is golden and will at minimum get you a pass. If you don’t follow anything that you are interviewing for… We can tell you we likely won’t think you want the position because it sounds like you already don’t.
Can You Pitch Me a Couple of Stocks? Translation: Did you Just memorize one stock? Generally if the candidate seems strong, and gives me something like the answer above we’ll ask more questions or ask for more stocks to see exactly where the candidate is in terms of knowledge. Paradoxically, you do not need to choose yet another stock in his/her sector because we assume you’re interested in the broad space “consumer, technology, financial, oil and gas”. Below is another structure to answer this question:
“I like XYZ stock, it has ___, ___, and ___ going for it. In an upside case I see the stock going up XX% and in a downside case I see the stock being flat/down XX%. Given this I see more positive than negatives working for the stock making it well positioned compared to peers because of XYZ. Finally, I think the balance sheet/cash flow/valuation is good”
The interviewee has implied many things, one “upside and downside” means you understand that research analysts never guarantee profits and always have “bull and bear” cases. Two you understand companies are compared against one another “well positioned compared to peers”. The last part while a bit vague, implies you at least understand the basics of finance and/or valuation.
Why This Group? Translation: What do you know about us, anything specific? Sometimes a generic response here is fine “Firm with great research in ___ sector and believe the overall bank is well positioned because of ___”. But many candidates mess this up by assuming this means “why this sector” and explain their interest in the space again. This is actually the time to lock down your interview, we have this as the third messed up question not because it will ding you dramatically, but because you can guarantee yourself a 2nd round. They will not ask you what you know about them unless they are considering you as a member. Well formed response below:
“I would like to be part of XYZ group/analyst (analyst if the job positing is for a specific person, ie: retail not “consumer” research) because I know that XYZ analyst or group has a reputation for research and I have seen XYZ person cited in XYZ journal/news articles. Also I noticed that XYZ companies were taken public by the investment bank and I believe this may be partly due to the strong coverage of XYZ sector. Overall, I believe this is the best place to build my knowledge base on XYZ space.”
Simply put you’ve implied you researched an analyst/the firms research, you understand research is a big part of IPOs if the analyst is good and imply you understand that research does NOT source IPOs, finally you’re willing to learn and are not a know-it-all.
If all of these answers go through smoothly, we can almost guarantee you’ll see round 2. (Note:we believe 75% of candidates fail one of these important questions)
