How to Get Into Equity Research?

A person can start his career in the equity research after getting the required bachelor’s degree in the field of the finance, economics, accounting or business administration preferably as it is relevant for the position and along with this person would have the attitude required to work in the area of equity research.

So you would like to get into equity researchEquity ResearchEquity 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. read more! You want to analyze financials, look at the annual reports of companies, forecast about the nearest future, do financial modeling, and explore various scenarios to choose the best one to buy/sell.

I used to work with JPMorgan and CLSA India 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.read more. I confess that finding a job in Equity Research is a difficult challenge, but definitely not impossible. In this guide, I will lay down step by step method to get your first entry-level job in equity research.

Understanding Equity Research Profession

Equity research is a profile that helps the IBDIBDInvestment 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. read more. Equity research professionals produce analyses, create recommendations, and suggest the right investment opportunities to institutions, investment banks, and clients. If you would like to be an equity research professional, you can either be on the sell-side (the investment banking wing) or on the buy-side (the institutional wing)Buy-side (the Institutional Wing)The term "buy-side" refers to entities that advise their clients like individual investors and institutional buyers on investments and securities purchases. Private equity firms, mutual fund companies, life insurance companies, unit trusts, hedge fund companies, and pension fund entities are examples of buy-side firms.read more. Or else you can work in an independent organization.

Unlike corporate finance, equity research professionals work in a very flat organizational structure. And there are only four main positions – Head of Research, Senior Analysts, Associates, and Junior Analysts. In equity research, associates are junior people who work under Senior analysts. In most cases, few associates work under one Senior Analyst and report to him/her.

Equity Reserach Hierarchy

A Senior Analyst usually analyzes a huge number of companies and delegate the work to associates. Analysts are split into different industry segments, and each analyst normally has the specific industry knowledge to handle the whole gamut of companies. Mentionable sectors that come under equity research are mining, telecom, consumer staples, healthcare, technology, etc.

So, How to Get Into Equity Research? Look out for entry-level roles  – Associates and Junior Analysts.

What is the role of Equity Research Analysts?

As an equity research analyst, your main work is to produce reports. The report can be updated within short notice, flash reports, or reports that are very detailed and in-depth. If you want to make a ruckus of your career as an equity research professional, your job is to create reports all the time.

Usually, reports can be divided into the following heads – research of the industry, overview & commentary of management, financial results based on historical data, forecasting, valuation, & finally, recommendations.

Educational Qualifications Required for Equity Research

How to Get Into Equity Research – If you want to get into equity research, you better decide in advance. Otherwise, the career path would become a little tricky.

Let us have a look at a typical job posting for an Equity Research AssociateResearch AssociateA 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.read more.

How to Get into Equity Research - Job Profile

source: https://chc.tbe.taleo.net

The basic educational qualification is a bachelor’s degree, preferably in finance, economics, accounting, or business administration. However, if you have a degree in mathematics, physics, statistics, or engineering, you are good to go. You can also do graduation in other streams, but then you need to take additional courses/training to understand financial analyses and financial modeling.

With a bachelor’s degree, you can directly get into equity research and will report to a senior equity research analyst. You can still do the masters if you want to, but it will not always pave the way to become a senior equity research analyst. But with a master’s degree, you can become a fund manager or progress in any portfolio position.

If you would like to go for any additional qualification, then the best is, of course, Chartered Financial Analyst (CFA) qualification. To be certified as CFA, you need to complete four years of full-time employment in a relevant field (read finance), and you need to clear three levels. Usually, the second and third levels are the toughest. But if you can clear CFA, you will be able to reach a much higher position within the firm.

Required Skills for Equity Research Role

How to Get Into Equity Research – There are few key skills that you must develop if you want to make your mark as an equity research professional.

Valuation Skills

Let’s see the most important skills of equity research professionals below –

For more details, please refer to Equity Research SkillsEquity Research SkillsEquity research skills are a set of abilities a research analyst should possess to provide an optimum investing solution. It comprises accounting skills, valuation, financial modeling, excel skills and writing skills.read more.

Equity Research Compensation & Work-life balance

How much would you make as an equity research professional? In the previous era, equity research professionals used to rake in millions; but nowadays, things have changed, and they have been earning compensation that is normal and as similar as front office investment banking jobsInvestment Banking JobsThe investment banking job description is a formal narrative that lists out the essential qualification, basic skills and technical skills required in a candidate to fill in the vacant investment banker position. It also explains the roles and responsibilities to be performed in this job position.read more.

However, that doesn’t mean that as equity research professionals, you will earn chicken feeds. No, your compensation would be much better than normal corporate finance profiles.

Let’s have a look at the compensation of equity research professionals at a different level –

  • Associate: This is the entry-level or junior-most position in equity research. The basic range of salary that the associates receive is $100,000 to $150,000 per annum. After adding the bonus, the take-home compensation for associates ranges from $125,000 to $150,000 per annum.
  • VP: In a flatter organizational structure, associates report to analysts or VPS. People who are at the VP position earn a basic salary of $150,000 to $275,000 per annum. With bonus, they earn around $225,000 to $375,000 per annum.
  • Director: Directors’ basic salary ranges from $250,000 to $350,000 per annum. With bonus directors earn around $400,000 to $675,000 per annum.
  • MD: Managing directors earn the most in equity research. They earn the basic compensation of $400,000 to $600,000 per annum. With the bonus, their salary reaches a range of $700,000 to $900,000 per annum.

The salary structure of each of the positions is basically dependent on certain factors. Let’s have a look at them one by one –

  • The performance of the individual: This is by far the most important factor responsible for your compensation. If you have been exceeding expectations of the management year after year, naturally, you will earn much more than an average performer.
  • Rankings: It is the rankings given by the investors on the buy-side. Did your investors earn more because you ask them to buy? If yes, it will directly affect your compensation.
  • The performance of the call you made: What you said to the investors is equally important in increasing/decreasing your compensation. If you have asked the investor to buy the stock before the price triples, you will definitely be receiving better pay.
  • Trading commissions: Your compensation will also depend on how much commission your reports and recommendations have generated.

Also, have a look at Equity Research JobsEquity Research JobsEquity research analysts jobs are competent for the candidates who have a keen interest and understanding in financial analysis of the companies. The profile includes suggesting equities as well as buying and selling the stocks on the clients' behalf.read more.

But what’s about work-life balance?

As equity research professionals, you will be working a minimum of 60-70 hours a week. Usually, you will come at 7:30 a.m. into the office and will leave at 7:30 p.m. Typically, you will work 12 hours a day, which will turn out to be 60+ hours a week.

However, you may also work more because there are no fixed timings for equity research professionals. Some days you need to work 14-15 hours, and most of the days, you will be able to finish your work under 12 hours.

Having said that, as equity research professionals, you will be able to maintain a healthy work-life balance, and you will also earn more than most of the finance professionals.

Strategies to get into Equity Research

How to Get Into Equity Research

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How to Get Into Equity Research? Here are a few things you can do –

Conclusion

The educational requirement for the equity research profile isn’t much. However, you need to have multiple skills to crack into the job. Use the above information and take the first step. The whole world of equity research is waiting for you.

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This article has been a guide to How to Get Into Equity Research. Here we discuss equity research career paths & its qualification, skills, experience, compensation & job opportunities. You may learn more about financing from the following articles –

Reader Interactions

Comments

  1. Anjali Bhute says

    Really awesome. Easy enough to understand and implement.

    • Dheeraj Vaidya says

      Thanks for your kind words!

  2. Wanambisi says

    Thanks for the post. It has really helped.

    • Dheeraj Vaidya says

      thanks Wanambisi. Glad you liked it!

  3. Amit says

    Hi Dheeraj that was awesome, actually i am also in the research field at current for boosting my resume recently i gave my CFA level 1 exam in June 2017

    Now just waiting for the result to be announced figure cross hope not to fail bcoz due to my profession i could not gave more time for studying..
    I just want to know that if i fail, so what is the next option in that should i give CFA level 1 exam again OR is there any other option for it

    Just Need a guidance……

    Thanks & Regards.

    • Dheeraj Vaidya says

      Hi Amit,

      How was your CFA Result?

      Best,
      Dheeraj

  4. Suraj Prakash says

    Hi Sir,I am btech 4th year student in mechanical engineering . I want to shift my career to equity research analyst without doing MBA.IS it possible

    • Dheeraj Vaidya says

      Hi Suraj, it is possible. Two things should help – 1) Learn all the Equity Research Skills 2) CFA Exam should boost your resume.

      Good luck,
      Dheeraj