It’s an SA’s life
Having a few metres between me and my career has given me the time to remember the highs and lows. And also the whys. Mostly, the SAs are regarded as obstacles and fun sponges. Maybe an analyst might read this and understand that we are ‘facilitators’ and ‘bacon-savers’ and are “here to help”.
Am sure someone has done all the statistics, but the number of human beings that are Supervisory Analysts is very small. No-one goes to school and thinks, “I want to be an SA when I grow up”. Most people don’t know what an SA is or does, including (at times, I have found) the SAs.
My introduction to the world of SAs was at Goldman Sachs. Three people had their Series 16 licence and were thus Supervisory Analysts. One was the head of research, one was an insurance analyst, and the third was a guy in the New York office. Given that all the equity research written in Europe that was distributed into the US had to be reviewed and signed off by an SA, these guys were busy. It was early days so not particularly high volumes, but they were very efficient and hardly ever asked for more information or made changes. I remember sending a pdf to the US for SA approval – it was a massive 100+ page outlook. It was returned in 10 minutes as approved. I was amazed.
I was encouraged to make the move from being an editor to getting my Series 16 licence. The carrot was a much higher salary given the scarcity of Supervisory Analysts in London. A two-day course delivered by a visiting guru and some studying and learning of the regulations, with a basic knowledge of a company’s accounts seemed an achievable task. However, what I didn’t take into account was that being a single parent, with two small children, working full-time left little extra time for said study and absorption. At that time, you could only sit your 3-hour exam on the third Saturday of every other month, starting at 9am at the Polytechnic of North London in Holloway. Not easy juggling that with little ones. In fact, the first time I sat it, my daughter was about 3 months old, and I had to get her grandma, Carmel, to come over and look after her while I went to sit the exam. The only thing I remember about that day is that I made Carmel some scrambled eggs and she hovered over me, watching closely. When I served it up, she praised me for making the eggs in the proper way – just eggs and butter – and that I hadn’t ruined them by adding milk or water. I passed the scramble eggs test but not the Series 16 exam. You had to call up 4 weeks after sitting the exam to see if you had passed, and then you would have to apply to sit the exam in the next round.
I struggled with it. The carrot was very carroty. But I felt like I had given my brain away to each of the little ones and the logistics were becoming tougher each time. I turned up once to sit the exam and was refused entry – they couldn’t tell me why – whether there was an admin problem so my name wasn’t on the list, or maybe I had sat it too many times, and there were no new questions for me to try. (The answer sheet was the old-fashioned 2B pencil strike through multiple guess type.) Eventually, while working at the Italian bank where the pressure on work/life balance was much lower, I was encouraged to take it again. I had decided in my mind that this was my last attempt. The lady in the US who you had to call to get your result knew my voice by now so every time I called up she would give me the sad news but then encourage me to try again. I also decided to take a risk and move jobs between sitting the exam and getting the result, with a provision that if I had passed, my salary would be adjusted accordingly. Happily, at the start on January 1999, the lady was excited to tell me I had finally passed the exam and I became a registered SA on 13 January 1999.
So, armed with my shiny new licence, I was the first and only SA in the also shiny new office of DLJ in London. Most of the European analysts did not really understand what I did, and the increasing volumes of research during the dotcom boom, meant a lot of reading and signing physical printouts of all the reports for record-keeping. How many trees died in those days – shocking.
So while the job was to make sure the research wasn’t misleading, the language wasn’t exaggerated or flamboyant, that the rating and target price were based on sound reasoning, it was really just editing with an extra badge. All the editors I have worked with have also become SAs or are as vigilant as an SA. It was the dotcom era and valuations were pretty interesting. Some analysts were always grateful if you spotted a slight wrong number somewhere, some were downright rude and dismissive (not many – just a handful) and some provided some very funny typos which we were sometimes tempted to leave in the report. A few times when changing jobs, and meeting analysts who had made the same move, I had read two versions of their initiation reports in under two years… I got to know that sector pretty well.
As the research world expanded and the regulations adapted, we had to become more alert to potential hazards. Sadly, some research became quite bland as the view was taken that, for example, film or song titles were inappropriate in titles for research reports. A few analysts did seem to think that they had to have funky titles to get their research to stand out and on many occasions I agreed with them. But the world was changing. So trying to find solutions to what the analyst wanted, what the ever-increasing regulations required, and what management deemed as best practice was not always an easy task.
I think most analysts still see the Supervisory Analysts as grumpy, nit-picking, perhaps unnecessary impediments to publishing their research. And yes, like analysts, we come in different shapes and personalities. At times, I have felt like the SA team is regarded as a (typing) pool of people sitting around waiting for someone to send in a report, and mostly just chatting or staring into space. When the analyst sends in their report, it is the most important item to be read and reviewed that minute – and as it has no mistakes in it, it doesn’t really need a review etc etc. It would have been helpful to swap jobs for a day with an analyst. With 50+ analysts telling you theirs is the most important report, there were some difficult conversations. It is interesting how people react under stress, and I seemed to find it easier to become less stressed when someone is shouting at me. I think it was a natural instinct to just stay still. Some animals that are threatened just freeze.
While the job of the SA is to look for potential errors, it is also their job to come up with different ways of expressing the same ideas but in a more compliant way. So rather than “profits and share prices will soar”, we would suggest “profits and share prices likely to rise sharply”. Same idea, just not promising the earth and all that’s in it. But I get that it would seem less exciting – and maybe chatgpt would come up with something better.
As time went on, more and more reports were deemed by research management and compliance to fall under the definition of research provided by FINRA. Having read the rules, I did try and talk through the interpretation and stance taken – just because the SA role was getting too encumbered by checking lists against other lists. This did feel less like adding value to a report and the analysts could not understand why a 50-page report of “just charts” needed to take longer than a sparrow’s fart to review and approve.
With the coming of AI, it will be interesting to see how the role of an SA will evolve. By the time I left, it had moved from being a very editorial-heavy job, to being quite a box-ticking exercise. Technology has really helped the job of an SA – with some so much better than others. Some workflows were magic – others seemed to have stopped being developed in the late 1990s. So long as the technology doesn’t end up delaying publication, or adding unnecessary obstacles or introduce too many false negatives or positives, it can help both the analysts and the SAs save time and relieve some monotony.
In the end, you want to feel like it has been a satisfying day in the office, that you have spotted something that the analyst hadn’t seen and you have worked with someone to make their lives feel better. Maybe not a career as an SA then…
Snoo's kitchen 