Equity Research Jobs (Careers)
Equity Research Analysts job includes both sell as well as buy-side firms which typically involves the different brokerage houses present in the market, Non-Banking Financial Corporation’s (NBFC), different securities firms, mutual fund companies, etc.
An equity Research career is all about financial statement analysis, economic analysis, comparable company analysis, valuations, recommendations, investment decisions, research report writing, management interactions, and a lot more. This job fits well for those who enjoy and understand financial modeling, passionate about analyzing companies, have the right attitude in decision making, and meet rigid deadlines.
Equity Research Job Criteria and credentials
- You can either join right after their graduation or after attending an MBA program. For the bachelor’s degree, specialization in economics, finance, or business would be helpful along with accounting knowledge and good computer skills.
- Further up, a master’s degree, again in economics, finance, or business, would increase your chances.
- Many get into equity research spend almost 5-10 years working and then look for an analyst job positions in the industry.
- Another credential that can be important to crack the equity research jobs is having an internship experience in an investment banking firm, which would prove your interest and inclination towards an equity research career.
- Apart from this, CFA is one such credential that could provide you with a good base to get into equity research. This CFA credential can prove useful if you clear the three levels of the CFA examination, meet the educational and work experience rule the institute specifies. Check out the CFA Dates and Schedules
Have a look at the below screenshot to know the criteria specified by the equity research firmEquity Research FirmThe list of top 10 equity research firms in the world comprise: JP Morgan Chases and Co, Bank of America Merrill Lynch, Credit Suisse, Barclays Capital, Citigroup, Goldman Sachs, Morgan Stanley, AllianceBernstein L.P.,UBS, and Nomura Holding Inc./division in an equity research job opening for the position of associate and analyst.
Equity Research Associate Job
Below is a snapshot of an equity research associate job opening
Equity Research Analyst Job
Below is a snapshot of an equity research analyst job opening
The good side of the equity research
- The economy is ever-evolving, which directly affects investment banking and equity research careersEquity Research CareersEquity research comprises an individual's expertise in researching, reporting, projections, and predictions surrounding a company's stock. The top five careers in equity research are - Market research analyst, Sector research analyst, Senior equity research analyst, Fund manager, and Chief investment officer. . If you are someone who is well updated about the market conditions, you would be interested in doing this job.
- The work is not as monotonous as it gets in other finance jobs. You will have new deals to work every time, which would be different from the other.
- This job is challenging as you would be competing with analysts at other equity research firms, too, and would want to keep your best foot forward.
- There is a lot of hard work time that you would use in publishing your research. But from there comes the motivation as your name would get published with the work you have done.
- You would develop details knowledge about a sector.
- You also get to interact and communicate with senior management teams and investors.
- The compensation in the form of salary and bonus too would be satisfactory for the hard work you put in. Check out the differences between investment banking and equity research.
The evil side of the equity research
- In not so good economic conditions getting a job in this field becomes difficult as there is tough competition and job positions are also less.
- The industry is fast-paced; hence the great work done by you would get irrelevant quickly. Also, because of this, you might feel that you are not appreciated enough for the hard work you put in.
- The working hour is comparatively longer than the routine corporate finance jobs and is majorly a deskbound job.
- You will have to face work pressure not only from your company but your clients as well.
What is expected from you at equity research jobs?
- The Equity Research Skills sets that you would need to excel at equity research jobs include financial analysis, business analysis, financial modeling, write reports, make presentations, and sound judgment.
- You need to be well versed with accounting and finance conceptsAccounting And Finance ConceptsAccounting concepts are the principles, assumptions, and conditions that govern accounting's foundation. They ensure that the accounting is done in a way that the financial statements present a true and fair view. but also should be aware of corporate strategies and keep update on the issues and regulations of the industry.
- You need to have good communication skills as you would constantly be in touch with your clients and learn about their management teams.
- To maintain and update the financial models in line with any new information that affects the stocks you are studying. Again you need to communicate the same to the sales force, traders of the investment bank.
- After gaining enough experience understanding accounting, corporate finance, and capital marketsCapital MarketsA capital market is a place where buyers and sellers interact and trade financial securities such as debentures, stocks, debt instruments, bonds, and derivative instruments such as futures, options, swaps, and exchange-traded funds (ETFs). There are two kinds of markets: primary markets and secondary markets., you would be asked to analyze a cluster of stocks within a specific industry.
- Since you are allotted a specific stock to study, you need to know everything about them and become experts on to make investment recommendations.
- You need to study the official financial information published by the equity issuing company through the sales report, annual financial statements, etc. and use it to predict future trends.
- As discussed above, you would be expected to provide intuitive investment ideas and recommend a buy/sell/hold rating on the companies you analyze. It is communicated to the interested parties such as the institutional investorsInstitutional InvestorsInstitutional investors are entities that pool money from a variety of investors and individuals to create a large sum that is then handed to investment managers who invest it in a variety of assets, shares, and securities. Banks, NBFCs, mutual funds, pension funds, and hedge funds are all examples., traders, general public via research reports, and formal presentations.
Let’s summarize the key accountabilities of an equity research analyst career;
- To make the quarterly updates.
- To write event updates.
- Updating the sales, dealing, and trading team about the latest events in the sector/company
- To build investment ideas/views that are distinctive in the market.
- To bring the maximum number of companies under coverage in the sector, he/she track over a period of time.
Hierarchy and roles
The structure of the equity research jobs is where you would have one head person who would generally make the decisions, and others follow them.
Listed below is the equity research job hierarchy that can be found in an equity research division of an investment bankEquity Research Division Of An Investment BankEquity Research refers to the study of a business, i.e., analyzing a company's financials, performing Ratio Analysis, Financial forecasting in Excel (Financial Modeling), & exploring scenarios to make insightful BUY/HOLD/SELL stock investment recommendations. Moreover, the Equity Research Analysts discuss their findings & details in the Equity Research Reports. . However, it might not get as hierarchical as the one discussed here. Many times it is restricted only to associate and analyst and the vice president position.
Inequity research jobs, the associate position is for those who are fresh graduates right from college. Their academic credentials would be given due weight-age and also intern-ship experience, if any. Typically a candidate with 1-2 years of work experience or someone who has cleared CFA level 1CFA Level 1The CFA exam is regarded as one of the most difficult to crack. Your preparation, time management, and sequence plays will all play an important role in your journey. or 2 would be recruited for this position. It is like a starting point where you would learn about the companies that are covered by your boss or the team you are part of.
- Your role revolves around updating the earnings model, industry models using spreadsheets, and database software such as Excel and Access.
- You will have to summarize news and recent developments that can affect the valuation of the companies.
- You need to script research notes on company news and earnings regularly.
- You would have to prepare a quarterly earnings report, which is one of the critical research reports.
- You would be involved in conversations with clients once your manager feels that you are comfortable with the work.
- Discuss deals with clients and try to build a reputation by performing well on behalf of your team
- After spending a few years as an associate, you would be promoted to the next level in line, the Analyst.
This equity research career position can be achieved depending upon how quickly you are able to get hold of the companies under study, discussing the industry of the stock that you have analyzed, your way of communicating ideas, and give formal presentations. To become an analyst, you would need an advanced degree in business administration and prior work experience as an associate.
- You would be allotted a set of companies/industries to work upon and be responsible for their research.
- As an analyst, you would have to maintain relations with clients, company management, and other industry experts. You would discuss the expected changes in the industry that could affect the stock prices of the companies you are covering.
- You would have to monitor trends in particular industries, conduct research on those industries and recommend a buy/sell/hold recommendation on the stock. Such research, of course, has to be backed up by reliable research.
After having served as an associate or an analyst, the next position equity research career progression is that of a senior analyst. As a senior analyst, you would be an expert on specific industries such as consumer goods, automobile manufacturing, pharmaceuticals, etc. The senior analyst level positions would need at least 5 years of work experience, MBA or finance based degree from a reputed college or the CFA charter. Useful comparison – CFA or MBA
- Analyze the activities and earnings of companies under the research of a particular sector.
- As a buy-side analyst, you would be producing research for hedge fundsHedge FundsA hedge fund is an aggressively invested portfolio made through pooling of various investors and institutional investor’s fund. It supports various assets providing high returns in exchange for higher risk through multiple risk management and hedging techniques., mutual fundsMutual FundsA mutual fund is an investment fund that investors professionally manage by pooling money from multiple investors to initiate investment in securities individually held to provide greater diversification, long term gains and lower level of risks., or investment management companies. By “buy-side,” we refer to the clients who are buying the securities and making investment strategies.
- As a sell-side analyst, you would be working for investment banks where the salespeople recommend the individual and institutional clients on investments through the research they produce. See the critical differences between Sell side vs. buy-sideSell Side Vs. Buy-sideSell-Side refers to those corporations, investment banks and advisory firms who engage in the issuance, selling and trade-in of the financial securities. In contrast, the buy-side involves hedge fund companies, pension fund organizations and investment managers who purchase financial securities.
Who provides you with equity research jobs?
Equity research is used in many areas. Primarily, these are the companies that need Research Analysts:
- Stock Brokerage
- Mutual Funds
- PE firmsPE FirmsPrivate equity firms are investment managers who invest in many corporations' private equities using various strategies such as leveraged buyouts, growth capital, and venture capital. The top private equity firms include Apollo Global Management LLC, Blackstone Group LP, Carlyle Group, and KKR & Company LP.
- Venture Capital Firms
- Credit Rating Firms
- Media Companies
- DataBase Firms
- Accounting firms
Below is an exhibit of the job description.
Work culture in Equity Research Career
- As Research associatesResearch AssociatesA research associate is a researcher who analyzes markets, the economy, and investments for investment banks, asset management organizations, and academic institutions. He or she also writes research summaries, compiles data, plans, and verifies numerical data./analysts, you would usually be in the office at around 7 am and leave by 7-9 pm. The average number of working hours is somewhere between 60-70 hours per week. It can be considered favorable compared to investment banking jobs, where analysts could work up to 100 hours a week but do expect it to be a 9-5 job.
- The working hours get worse during the earnings seasonEarnings SeasonThe Earnings season refers to the quarterly report of companies' results, such as revenue/profits, released in the first two weeks after each quarter ends (Dec, Mar, Jun, Sep). It helps investors in making investment decisions and determining the value of their investments. as the financial models need to be updated and issue new reports. You might have to stretch the hours up till 12-14 hours every day then.
- There are also conferenced which you need to attend. They can get hectic because you are constantly interacting with people all day and then get back to your desk and work till late at night.
- Working weekends are limited to situations like preparing an urgent report/earnings period.
- The work culture at an equity research firm is generally reserved in nature. You are expected to be cool and composed, keep an eye on the market events, and how the stock will perform in the coming future.
Equity research Salary
You could expect an equity research career as financially rewarding. The salary would increase with good experience and credentials. Your salary would include an element of annual bonus based on your performance. The bonus is small at the start, but as you are established, and work gets published, the bonus can be a pretty hefty figure.
Below is the excerpt from the Financial-Salary-Guide-2014 by Robert half. It shows the average salary for financial analysts, which include equity research careers.
Quality of work
- You would get to continuously interact with salesforce and traders, portfolio managers, analyst’s investment summary when the company earnings are reported. It helps you to learn a great deal.
- You could develop your financial modeling skills by constantly updating and analyzing companies’ financial forecasts. However, your work would be focused mainly on the operating model.
- Research associates are usually not exposed to live transactions and their negotiations; hence you do not get complete insights against the investment banking divisionInvestment Banking DivisionInvestment Banking Division is a segment of the investment bank offering advisory & corporate finance services. It executes mergers & acquisitions, deals with capital raising, & handles several kinds of advisory mandates. .
- In reality, the initial years would be restricted in performing monotonous tasks of creating research notes and updating the senior analyst’s marketing material.
You may have to work as an associate for 3-4 years and then work as an analyst for several other years before getting promoted.
The below picture explains the exit options/career paths one has after being a sell-side research analyst.
- After you have worked as an associate/analyst, the next opportunity could be found within the same equity research firm by moving up in the hierarchy. We have already discussed the same above while we saw various positions and their roles in equity research.
- The next best would be to switch over the buy-side. Here you would be working for the hedge fund managers or the portfolio managersPortfolio ManagersA Portfolio Manager is an executive responsible for making investment decisions & handle investment portfolios for fulfilling the client’s investment-related objectives. Also, he/she works towards maximizing the benefits & minimizing the potential risks for clients. . The skillset for both is similar as you are analyzing investments and making recommendations. The buy-side offers an even better lifestyle and actually investing. Having said that, the buy-side is hugely competitive, even for research associates. One tip here could be that the associates should enhance their profile by receiving the CFA charter and going to business school before getting into the buy-side.
- Working on the sell-side, you would analyze a lot of company financials and understand its effects. Hence you can get into typical corporate finance roles that perform similar financial analysis jobs.
- Getting into private equity (PE) could be another exit option. However, this can get tough as you are not working on transactions at equity research jobs and hence the profile differs a bit. That does not mean it is impossible to get into PE. As an Equity research analystEquity Research AnalystAn equity research analyst is a qualified professional who interprets financial information and trends of an organization or industry to provide recommendations, opinions, reports, and projections on the corporate stocks to facilitate equity trading., you would be well versed with investment research only that this will be respect to private companies and not public.
Tips for making an Equity Research Career
- Preferably it is better to have an MBA specializing in finance or a CFA charter
- Invest your initial years in understanding the markets and practicing technical & fundamental analysis.
- Basic knowledge of stockStockStock exchange refers to a market that facilitates the buying and selling of listed securities such as public company stocks, exchange-traded funds, debt instruments, options, etc., as per the standard regulations and guidelines—for instance, NYSE and NASDAQ. exchanges and how they work;
- Go in for internships to practically understand what happens at equity research jobs.
- In case you lack an MBA from the top institutes or do not have enough experience try and build your own research reports. There are various courses that can teach you.
This article has been a guide to Equity Research Jobs. Here we discuss Equity Research careers of Associates and Analysts, along with the skills and the core criteria required to get hired. Additionally, we discuss the salaries, work culture, good and bad about an equity research career. You may also have a look at these articles below to learn more about Equity Research –