Should I get three more letters?

April 26, 2006 4:22 PM

Should a molecular biology PhD student, interested in a career as a biotechnology analyst bother taking the CFA exams?

Will passing the three exams (but obviously not getting the credentials due to not having the necessary 3 yr financial industry experience) give me a step up when I start looking for biotechnology analyst positions? What are other options for getting a foot in the finance world? Is all that studying (not to mention $$$ for books) worth it?

posted by anonymous to education (4 comments total)

I assume you mean an analyst as in an equity research analyst, most likely at an investment bank?

While I don't have direct experience in the world of equity research, I consume a lot of the stuff. When I look at a piece of research, there are usually several names, the analyst herself and a few underlyings. Usually just the analyst or one or two others have CFA designations - I presume that the junior folks haven't earned theirs yet. I sincerely doubt that these junior people came on with the three exams under their belt and are just waiting to rack up the three years of experience. However, it is very likely that when they applied for the job, they had already taken the first CFA exam or had signed up for it. I see lots of resumes with "CFA I Candidate" and "CFA II Candidate" or whatever the correct nomenclature is. Definitely do not waste three years taking all three exams before you start your job search (I think you can only take one test a year).

You should speak with the career center at your university. You should be on equal footing with the MBA students. All new hires at large investment banks (both on the banking side and the research side) will go through an intense training program - 6 weeks or so of intense financial education. And you will also learn on the job. The MBAs will have some of the finance skills already, but these skills can be taught easily so banks are interested in other things as well (for undergrads, they are truly major agnostic). If you went ahead and took the first CFA exam, or even signed up and started studying, you will be able to show potential employers that you are motivated to learn finance. That combined with the industry expertise should really help you get on even footing with the MBA candidates.

Maybe you're already headed down this route, but make sure you check out opportunities at hedge funds and mutual funds. With all the regulatory scrutiny and self-imposed restrictions, I think sell-side research is a dying industry. Hedge funds in particular are a hot field right now and since they are not as institutionalized as investment banks, they are much more flexible in hiring requirements and process.
posted by mullacc at 5:07 PM on April 26, 2006

IAA biotech/pharma consultant and for a while I was recruiting with banks for equity research and banking positions. Given your background, the most common question you'll be hearing in interviews is "Why finance/banking?" They want to see that you'll be committed and interested in the work. If you have the time to study and you can afford it, take the Level 1 exam. It's not very difficult and it demonstrates that you have more than just a passing interest in finance and some mastery of basic concepts. How much it helps varies with each interviewer but I think it's definitely a boost when you're coming from outside the typical MBA track.

I wouldn't take Level 2, that's a bit overkill and you may end up with an interviewer question like "What are you doing getting a biotechnology PhD if you have so much free time and interest in finance to be studying and taking the Level 2?"
posted by junesix at 5:30 PM on April 26, 2006

I can help you, sort of. My email is in my profile.
posted by Kwantsar at 7:38 PM on April 26, 2006

A few thoughts:

(1) It's a great idea for someone in your spot to take and pass CFA Part I prior to the job search, for the reasons JuneSix said -- especially that it really helps you stand out from all the other MDs and PhDs who want to get into finance. You can take in December or June, and need to sign up for a prep class (about the same amount of prep as the MCAT requires, if you ever took the MCAT.)

(2) However, for biotech finance you don't need a full CFA charter if you have a PhD. You'll find that most PhD or MD biotech analysts don't have one, and almost nobody in a non-analyst role (investment banking, VC, PE, corporate development) does. Unless you go to work for a place that unusually fetishizes the CFA, (further) progress towards a charter won't really impact your career -- the quality of your work and your relationships with the trading desk and the customers will, particularly given the three-year work period that it would require to earn a charter, exams aside.

(3) Where you face a difficult strategic choice is if you are still a couple of years away from getting your PhD. You would have enough time to take Part II and Part III before you start your job search -- the question would be should you? Part II is harder than Part I, and Part III is harder than Part II -- so the scale-up in study time and commitment is significant, and the risk of failing is quite high. The positive data point value of having passed Part I would probably be swamped by the negative data point of value of having failed the most recent Part.

Feel free to contact me on my profile, as well...
posted by MattD at 8:04 AM on April 27, 2006