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Equity Research Careers: A Day in the Life, Advancement, Compensation, and Exit Opportunities

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So, you won equity research interviews by networking aggressively…

You presented 2-3 well-researched stock pitches and passed your interviews…

…and despite MiFID II and rumors of the industry’s demise, research teams still exist at banks.

What happens when you start your equity research career, how much will you work, and what exit options will you get?

All good questions – so we’ll answer all of those and more here:

What To Expect In An Equity Research Job

Similar to other public-markets roles, you might arrive at work a couple hours before the market opens. In New York, that means “around 8:00 AM.”

Once you arrive at your desk, you’ll spend some time catching up on emails from traders and salespeople, reading the news, and monitoring overnight market developments.

The rest of the day is a mix of keeping things up to date (e.g., financial models), researching companies, and finding new companies to initiate coverage on.

The best and most experienced Associates also interact with clients and set up management meetings between companies and buy-side firms, and these are the real moneymakers for equity research careers in the post-MiFID II environment.

Doing the work required to initiate coverage and building the initial model can take months, so teams need to balance that with other tasks, such as client summits and conferences.

Professionals in equity research careers are  best-known for insightful reports , but these reports do not necessarily take up the bulk of staff time.

That said, if the group is working on a detailed “thought piece” that reaches counter-consensus conclusions, that can consume a lot of time and effort. But it can also be worth it if it results in more viewership and client interactions.

Your time allocation during the day depends heavily on the industry you’re covering and how the Research Analyst (read: your boss) likes to run things.

In some teams, Associates spend 75% of their time modeling, but in others, it might be closer to 25% – and that percentage often changes over time.

Often, junior team members get tasked with modeling or grunt work, especially in larger teams, and senior members spend more time talking to investors and companies.

In equity research internships , you’ll assist the full-timers with data gathering, industry research, model updates, and more.

Equity Research Hours

If it’s a normal day, you might leave around 8:00 PM, which means ~12-hour workdays.

However, hours get significantly worse during earnings season , which happens once per quarter, and during industry conferences.

Unforeseen news events and developments, such as regulatory changes, M&A deals, earnings pre-announcements, or Amazon entering your space, can also make the hours worse.

Earnings season is busy because you have to update all your models and issue new reports with new estimates, and industry conferences are busy periods because you run around meeting people during the day and then do your actual work at night.

In both those periods, the 12-hour days can easily turn into 16-hour+ days, so the job will approach investment banking hours .

If you experience consistent mid-intensity stress levels in banking, equity research careers give you low-intensity stress most of the time, with occasional spikes to high stress.

As with any other public-markets roles, your schedule can be tough if your time zone doesn’t match the time zone of the major financial center in your region.

For example, if you’re on the West Coast of the U.S., you can look forward to waking up at 4 AM and arriving at the office by 5 AM each day.

Finally, the hours can get worse as you advance because Analysts have to travel and interact with clients while still assuming responsibility for published research.

Equity Research Careers: Example Reports and Other Deliverables

The published reports represent the “deliverables” that most people associate with equity research.

We linked to a few examples in Part 1 of this series on equity research recruiting :

• Morgan Stanley – Update on Lululemon Athletica
• Morgan Stanley – Initiating Coverage on Citizens Financial Group
• RBC – Initiating Coverage on Waddell & Reed Financial
• Lehman Brothers – REIT Sector Overview
• Lehman Brothers – Initiating Coverage on CBS Corp

You can divide these reports into three broad categories:

• Initial Opinion / Initiation of Coverage (IOC): This one is the first report ever published by the team on a specific company. It tends to be long (dozens of pages or more), and it has a lot of industry/market data, detailed rationale for the projections, information on competitors, the company’s valuation, and more.
• Industry Overview / Primer: This type of report also tends to be long (dozens of pages) because it covers an entire industry, such as U.S.-based pharmaceutical companies or European ground transportation companies (read: trucking). There will be sections on trends and key drivers/metrics, risk factors, legislation, and overall valuation levels, followed by shorter sections on specific companies.
• Company Note: This report is shorter (5-10 pages) and is issued when a company reports earnings, hosts an investor day, presents at a conference, or makes an announcement that impacts its strategy, such as an acquisition or the launch of a key product.

The “Initiation of Coverage” and “Industry Overview” reports consume a lot of resources, so teams must weigh the benefits carefully before deciding to invest the time and effort in creating them.

A typical research team covers around a dozen companies, so if your sector is “Large-Cap European Airlines,” your coverage list might include the Lufthansa Group, Ryanair, IAG (British Airways, Iberia, and others), Air France-KLM, EasyJet, Turkish Airlines, Aeroflot Group, Norwegian Air, Wizz Air, Pegasus, Alitalia, and TAP Air Portugal.

You focus on names that buy-side investors are interested in – in Europe, they’re paying you directly for the research, and in other regions, they’re making trades through your bank and generating commissions, and you encourage those trades with research.

Some boutique and middle-market firms focus on lesser-known names because they can add more value when they’re not team #37 covering the same company.

Your team might decide to initiate coverage on a new company when a firm you cover is acquired or gets de-listed, or because the company’s strategy or business model changes, or because your team gets additional headcount.

When that happens, you can expect to do a deep dive on that single company and its sub-industry for weeks or months until you have a detailed projection model and qualitative research to back up your assumptions.

The Equity Research Hierarchy and Promotions

In research, the most senior team member is the “Analyst,” and below that are the “ Research Associates .”

Each team usually has one Analyst and 2-3 Associates, with one Associate for every 7-10 names under coverage.

This system is a bit confusing because “Analyst” and “Associate” are just the titles used on published reports.

Internally, the hierarchy is still similar to the one in the investment banking career path , where you advance from Associate to VP to Senior VP/Director to MD.

The difference is that Analysts can be different levels: VP-level Analysts vs. MD-level Analysts, for example.

The total headcount across equity research at all banks in the U.S. is an order of magnitude smaller than the investment banking headcount: Hundreds of professionals rather than thousands.

That smaller industry size and the historically lower turnover mean that it’s often difficult to advance in equity research careers by staying at the same bank.

Sometimes you may get lucky and find an opportunity if your Analyst suddenly leaves, but you’re more likely to get promoted by joining a different bank.

To advance, you must build a reputation instead of burying yourself in Excel all day. No one cares how fancy your model is – they care how good your insights are.

Many Associates struggle to move up because they don’t take the time to get to know management teams and institutional investors.

If you don’t perform well enough to advance, you won’t necessarily be fired dramatically ; research professionals are cheaper than bankers, and there’s no fixed 2-year or 3-year program.

That said, it is not unheard of for entire research verticals to be eliminated during cost-cutting season.

At the junior level, people tend to stick around for 2-4 years before moving to another firm or leaving their equity research careers behind.

Equity Research Salary and Bonus Levels

As of 2018, Associates in major financial centers tend to earn between $125K and $200K USD in total compensation, with about 75% of that from their base salaries.

Post-MBA and graduate-level hires earn in the middle-to-high-end of that range, and possibly slightly above it.

As with investment banking compensation , you’ll probably earn below this range in London for a variety of reasons (GBP/USD, Brexit, MiFID II, pay is almost always lower in Europe, etc.).

VP-level professionals earn between $200K and $300K, again with 75%+ from their base salaries.

However, at smaller banks, VPs could earn below this range – something closer to the Associate compensation range is possible at the lower end.

Directors might earn between $300K and $600K, with 50-75%+ of that in base salary. At this level, the year-end bonus starts to make a huge impact on total compensation.

Finally, MDs could earn between $500K and $1 million, with base salaries in the $250K – $600K range.

Back in the dot-com boom of the late 1990s, some Analysts earned $10 million+, but these days, it’s a great outcome if an MD-level Analyst clears $1 million.

To earn in the low millions (say, $1.0 – $2.5 million), you’d likely have to be one of the top few Institutional Investor-ranked Analysts.

With MiFID II, these numbers will almost certainly fall – especially in Europe.

Equity research careers have always paid less than ones in investment banking, and that difference is likely to widen over time.

Historically, bonuses were based on 1) Analyst rankings such as the Institutional Investor Poll (II) Greenwich Poll; 2) the performance of Buy/Hold/Sell calls; and 3) revenue indirectly generated via trading commissions and investment banking fees (e.g. from companies going public or public companies issuing follow-on offerings through the bank).

With MiFID II, the basis of compensation will presumably shift to the amounts buy-side firms are spending directly on research.

The research reports themselves are not necessarily that expensive, but interactions and management meetings, non-deal roadshows, and conferences add up, and in some cases, buy-side firms end up spending more and consuming less.

Buy-side firms spend this money because many of their professionals cover breadth rather than depth, and sell-side Analysts might know specific companies in more detail.

Research compensation is likely to become more lopsided, with the top-ranked groups garnering the bulk of the fees and lower-ranked firms fighting over the scraps.

Equity Research Exit Opportunities

The bad news is that it is almost impossible to break into private equity directly from equity research.

Yes, a few people have done it over the years, but it’s far easier to transfer into investment banking first if you want to go that route.

You do not work on mergers, acquisitions, or leveraged buyouts in equity research, which makes your skill set not-so-useful for PE roles.

It’s far more common to move to hedge funds or asset management firms since there’s a direct skill set overlap – you analyze public securities and make investment recommendations in each one.

Within that category, long/short equity funds are the most natural fit for equity research professionals, while global macro funds are the worst fit because you work on the “micro” level in most equity research groups.

Other types, such as merger arbitrage and event-driven funds, could be a good fit depending on the sector you covered and the importance of deals, news, and events in that sector.

For more about this topic, please see our articles on hedge fund careers and private equity vs hedge funds .

Another option is to start your own fund eventually, which we cover in our “ How to Start a Hedge Fund ” article – but the key word there is “eventually” since you won’t be able to do this directly out of an ER role.

You could also move into the corporate finance career path at normal companies, investor relations , or potentially even corporate development – your industry expertise may compensate for less deal knowledge there.

Some professionals also leave their equity research careers and move into corporate strategy because their coverage and analysis of companies is typically higher-level, which fits right in with strategy.

In those roles, you might also be in charge of competitive intelligence, monitoring your firm’s peer group, and publishing internal reports.

Some research professionals also decide to attend business school, and if they do, they’re viewed similarly to other high-performing financial professionals .

One challenge is that it can be harder to get solid recommendations in equity research because team sizes are smaller, and the Analyst calls all the shots.

So, if your Analyst relationship isn’t great, you may have to request recommendations from other groups or people outside the firm.

It’s not uncommon to ask another Associate, a salesperson, or a trader for a recommendation for this reason.

Are Equity Research Careers Still Worthwhile?

Going back to that question we posed in Part 1 , our most frequent query about equity research careers goes something like this:

“Everyone says the industry is dying! Should I still go into it? Won’t the new regulations, falling commissions, and passive investing destroy everything?”

And the answer remains the same: The industry won’t go away overnight, but it is less appealing than it once was.

However, that matters a lot more for Senior Analysts with 10+ years of experience whose business models are being pulled out from under them.

If you’re at the undergrad or MBA level, you could still make a solid case for working in equity research for a few years and then using the skill set to move into another industry.

You’ll do more interesting work than in investment banking.

You’ll have more of a life, with saner, more predictable hours and occasional stressful periods.

You’ll build a solid network of buy-side professionals and company managers.

And you might even be able to sneak in through the side door – like an undervalued stock.

• Equity Research Recruiting – Part 1
• Equity Research Careers – Part 2

You might be interested in:

• Biotech Equity Research: The Best Escape Plan from Medicine or Academia?
• The Equity Research Analyst Career Path: The Best Escape from a Ph.D. Program, or a Pathway into the Abyss?
• Fixed Income Research: The Overlooked Younger Brother of Equity Research?

Numi Advisory  has provided career coaching, mock interviews, and resume reviews to over 600 clients seeking careers in equity research, private equity, investment management, and hedge funds. With extensive firsthand experience in these fields, Numi offers unparalleled insights on how to ace your interviews and excel on the job.

Numi customizes solutions to each client’s unique background and career aspirations and helps them find the path of least resistance toward securing their dream careers. He has helped place over 150 candidates in leading buy-side and sell-side jobs. For more information on career services and client testimonials, please contact  numi.advisory@gmail. com , or  visit Numi’s LinkedIn page .

About the Author

Brian DeChesare is the Founder of Mergers & Inquisitions and Breaking Into Wall Street . In his spare time, he enjoys lifting weights, running, traveling, obsessively watching TV shows, and defeating Sauron.

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31 thoughts on “ Equity Research Careers: A Day in the Life, Advancement, Compensation, and Exit Opportunities ”

The article was extremely informative, thank you so much! I do have the age old question: how do I go about cracking ER? Ofcourse, depends on several variables, listed below- 1. Education: BS Finance, Diploma in Financial Mgmt, MS Finance (in a Russell Group uni in the UK), CFA L1 candidate (thorough with the portion, just waiting on my exam date really) 2. Work Experience: Currently a Financial Data Analyst at a worldwide top financial services firm. (for reference – this has nothing to do with deals, M&A, equity research in the slightest unfortunately) 3. Grades: Masters – 2:1 (1% off distinction) 4. Networking: Unfortunately very limited, barely anything really. Primarily because I’m not very sure as to who do I reach out to in the first place?

Further, does the CFA really boost your ER application to new levels?

Thank you so so much for this article. Very grateful in advance for answering my long question! :)

The CFA does not help that much vs. everything else. Yes, it may give you a modest boost, but it’s not the #1 thing that ER teams look for. I would recommend reading the ER recruiting guide article for more on this, but, realistically, I’m not sure your chances of winning an ER role are great because your current work experience isn’t too relevant.

If you can prepare some very good stock pitches and do a ton of networking on LinkedIn (see: https://mergersandinquisitions.com/equity-research-recruiting/ ) and put in a ton of time and effort, you might be able to do it. But, honestly, I think you’d probably have to move into a more relevant full-time role first, such as something related to investing or the public markets.

Hi Brian, I’ve worked at equity research for 6+ years and now trying to figure out which division I should go to at the corporate side. Which function/role do you recommend if I have all the options – corporate strategy / corporate finance / corporate development / investor relations / treasury? I am skewing more towards investor relations but my end game is to become CFO or move back into finance (asset management), so I do want to do more of analysis and internal role rather than communication.. Would love to hear your thoughts on this, thanks.

You could do any of those, but if your goal is to become a CFO, the corporate finance option is the most relevant. Strategy and corp dev are maybe “more interesting” but do not lead to CFO roles in most cases. And Treasury is usually a part of corporate finance. Investor relations is more relevant if you want to do fundraising or related roles.

I am a sophomore in college and want to break into Venture Capital one day. I am certainly a hard worker, but I feel like the lifestyle of an investment banker takes hard work to an extreme. I am a health conscious person and I want to prioritize that, which I feel like I can not do in IB. If I were to start out in equity research, I think I would develop strong valuation skills. However, I know I would lack the deal experience to pivot into PE or VC. Could I do equity research, then management consulting, then pivot into PE or VC? Or would you switch those two around? Do you have other ideas? For me, I don’t necessarily have a short timeline where I want/need to work in PE or VC in 2-3 years. I know that it might take me longer without the IB background, and I am perfectly fine with that. With that said, do you have any advice?

You could do that, but I’m not sure why you need ER first if you want to do consulting and then PE/VC. It seems like you could just do consulting first and get into one of those (VC is much more likely than PE, at least if you’re in the US).

I would recommend looking at the VC career path article on this site because there are many different routes into the industry, and you don’t necessarily need IB or consulting experience first. It helps, but people can also get there via startups, product management sales/biz dev, etc.

Hi, May I ask what are the current comp ranges like at the different levels for BBs? How significantly different is it from IB? How are the exit opps too to Hedge Funds? Do headhunters contact ER analysts as well?

It’s a significant discount to IB. Compensation doesn’t really change much in the span of 2-3 years if that is your question, so the ranges here still apply. Most HF recruiting is off-cycle, meaning you need to do the legwork and outreach yourself rather than relying on headhunters. Headhunters may contacts some ER professionals for certain roles, but it’s not the same process as the IB –> PE recruitment pipeline.

Hey Brian, I’m a bit confused as to the difference between an equity research analyst and a desk analyst in the s&t. Are they mutually exclusive or are they progression within the ER department. This doubt comes from the article on the distressed desk analyst.

There is some overlap between certain desks, but S&T is very different in most cases because it’s responsible for executing trades and selling/distributing products to clients. There’s overlap in the sense that you may do “research” in both ER and S&T, but the purpose is quite different because in ER, it used to be to encourage S&T clients to trade, and now it’s produced so that banks can charge clients directly for the research. Distressed debt is probably the area where S&T is closest to ER, but even there, it’s different because you do not trade or sell anything in ER. And there is no distressed debt ER group – maybe there’s a credit or fixed income research group that covers distressed debt.

Will a msf from a non target school help you get into equity research? Are they less lenient than investment banking when it comes to the school that you attend? Or do you have to go to a target school for equity research?

ER does almost no on-campus / on-cycle recruiting, so a better school helps, but not as directly as it does for groups that come to campus to recruit.

Do you believe that a msf will help to help me get into equity research

Impossible to say because I don’t know your university, GPA, previous work experience, networking, etc.

Very informative article, thanks. I am interested in making a career move and would greatly appreciate some advice. I have 7 years experience in financial services audit with a big 4 and am at the manager level. I’ve worked across a spectrum of industries in multiple cities – Dublin, New York and Chicago. Is it realistic for me to able to find an ER role with my background? If possible, will it be an uphill battle? Thanks

Potentially, yes, but it really depends on what your Big 4 experience looks like. If you’ve just done audit it will be tough because you need valuation/investing experience to get into ER in most cases (or deep knowledge of a highly technical industry such as biotech or semiconductors).

How do you view the ER/AM/HF career now in light of COVID19 (along with all the previous ongoing headwinds)? Would starting off in IB make more sense?

It has become an even worse career path, so yes, IB is still a safer bet.

I have completed foreign equivalent of CPA and all 3 levels of CFA. I have about 5 years of professional experience in tax consulting with Big4 in India and about 2 years of experience in a Financial Controller in UBS in USA. I also have 3.5 GPA.

I am facing huge barriers to break into investment banking / equity research / private equity / hedge funds on Wall Street even in entry level roles due to bias and prejudice related to my professional background and education.

I am not very clear as to which exact path ( IB/PE/ER/HF/AM) I wana take but my goal is to work on wall street, maximize compensation and do reasonably interesting / intellectually stimulating work.

Given my background, which of the above career paths would be relatively easier to crack / better suited to my career goals? I am also open to doing full time MBA from a top school to be able to make this transition to wall street coveted roles.

How should I go about strategizing my career and what all do I need to absolutely do so that I have a reasonably good shot at achieving my goals ?

Appreciate your guidance.

All of those paths are going to be difficult if you have 7+ years of work experience in tax/financial controller roles because the skill sets don’t have much in common with IB/PE/ER/HF/AM.

At this point, you will probably have to complete a top MBA to make this transition because the window closes once you’re more than 2-3 years out of undergrad.

But I think you should start by figuring out what you want to do because all those careers are very different… start by reading our coverage of each one on this site.

Hi Brian, I have completed CPA as well as CFA recently and will soon be registered with FINRA. I have around 4 years of experience in consulting in the big4 in india and about 1.5 years of experience in financial controlling in UBS in usa. I want to get into an AM/HF investing role for the long term with a goal of maximizing compensation. What is my best/quickest bet to make this happen ? I was considering interviewing for an equity research analyst position in BB / buy side research analyst position in BB and then 1-2 years down the line make the switch. Whats your advice?

I may get an offer soon for a research analyst position in the Chief Investment Office of UBS – should i take it up? Will i be able to make the switch 1-2 years down the line?

Yes, I think you could probably do that. A Research Analyst role would set you up for the others you mentioned. I think the main point is that you need to move quickly no matter what you do because you’re getting to the point where you might have “too much experience” to move into research (though it’s still more flexible than banking). So, if you get this Research Analyst offer, you should take it. If not, maybe network around and interview for ER roles at the large banks and then make the switch after that. I don’t think you could move directly from financial controlling to AM/HF investing.

Thanks for the advice.. very reassuring to know you agree with my thoughts. Wanted to clarify 1 thing: if i take up the research analyst role in the CIO of UBS, would i still NEED to move into an ER / buyside analyst role at a large bank before i can switch into an AM/ HF investing role ? If thats the case, should i target moving directly into these roles – if im able to pull it off quickly ?

No, I don’t think you would need to move into another role just to switch into AM / HF investing from there.

Hey Brian – could you elaborate on what you mean by too much experience? Is it more difficult to start a career in ER/IB/HF/AM as one gets older (I’m 30).

Yes, it gets more difficult. They’re not going to hire someone with 8 years of full-time experience for an entry-level IB role. Other fields are a bit more flexible, but you still generally need to move quickly because it becomes more difficult to switch over time.

Very informative article. Hi Brian, I am a current Masters of Finance student in Europe and I’ve been trying to secure a job in IBD (M&A in particular) with no success so far. However, I’ve recently won an offer for an Intern in sell-side equity research in a small bank. I have prior big 4 experience, but no banking experience. Do you think this summer internship, would increase my chances of winning an IBD role afterwards?

Yes, an ER internship, even at a small bank, would definitely help with IB roles in the future.

Thanks a lot for taking the time to reply, really appreciate it!

Great article! I’m working in ER atm and this is bang on. Question however. If I am looking to make the switch over to IB, are my chances any good with a lateral move or would it make sense to go back for my MFin or MBA?

Thanks. You should definitely try a lateral move before considering another degree. Another degree should be your “Plan Z” option in this case if absolutely nothing else works out.

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Equity research overview.

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Equity research is a great career path that combines deep industry analysis, financial modeling, and writing research reports. Equity research is a field that allows you to deeply learn about a specific industry and forces you to become a subject expert on a group of companies. Equity research is a popular field because professionals tend to work fewer hours than their investment banking / private equity counterparts and enjoy more stable career trajectories.

Equity research is a sell-side role that combines a unique blend of skills that includes writing, deep analysis, and client management. And in equity research, you spend your entire day looking at public stocks and the public markets, which is arguably better training for the hedge fund job than investment banking. As such, equity research is often a great precursor to hedge fund roles and investor relations roles.

What’s very interesting about equity research is that it is often the best entry point for people coming from non-finance industries. To be an excellent equity research analyst, you need to have unparalleled knowledge about an industry, which often makes people coming from that industry more suited for the job. It turns out that it’s easier to teach a doctor about financial modeling than it is to teach a banker about medicine. As such, if you’re in a highly technical field like medicine, engineering, or aerospace, equity research is probably the easiest way for you to lateral into a finance role.

If you're interested in breaking into equity research, check out our course , which will teach you all of the modeling, valuation, and recruiting strategy you need to get the job.

What is Equity Research?

Equity research is the sell-side function in which you develop investment recommendations, industry research, and company analysis for clients. You are responsible for covering a stock, in which you will report on quarterly earnings, financial filings, and all major news events. You are essentially like a news reporter on a particular stock – you study everything to do with the stock and give recommendations based on your research. You will also have direct access to the public company’s management, a luxury that many investors do not have.

Responsibilities typically include:

Building financial models to forecast out the performance of the stock.

Developing a comprehensive report on a new company (an “Initiating Coverage” report).

Writing update reports when a company reports earnings or has a financial event.

Liaising between corporate executives at public companies and investors.

Assisting investment banks with industry-specific knowledge during initial public offerings (“IPO”).

Educate investor base on new tradable securities that the company is going to issue.

Equity research teams typically either operate within an investment bank or as their own independent agency.

Each of the bulge bracket firms (GS, JPM, MS, etc.) has an equity research team and many of the elite boutiques also have equity research functions. Not every equity research team will cover every single industry and company. The larger bulge brackets typically do not directly cover small-cap companies, which are often the purview of small equity research shops. This structure mirrors that of investment banking, where industry coverage is dependent on personnel and client demands.

There are also “pure-play” equity research firms ( Bernstein Research , Frost & Sullivan ) that independently provide high-quality research.

In terms of work/life balance, the equity research job has a high amount of seasonality. When public companies report earnings, the amount of work required by the equity research team is much higher. Companies report earnings four times a year during Earnings Season , whereby equity research analysts have to publish earnings reports, do investor calls, and update their models.

You might work 40-60 hours for most of the year , but during the period that your covered companies are reporting earnings, you could work up to 60-80 hours per week.

Why Equity Research?

Equity research can be a great career path for the right kind of personality. Some of the biggest draws include:

Pros of Equity Research

Become an industry expert in a specialization

In equity research, you get to go extremely deep into an industry vertical and learn about a couple of companies extremely well. You arguably get to learn more deeply about companies in equity research more than any other part of finance due to your access to company management and level of focus.

Understand the investment narrative of both sides of a trade

One of the most interesting parts of the equity research job is that you get to interface deeply with the company and with investors. As a result, you’ll get to learn about what management believes in, what the investor sentiment is, as well as the biggest concerns that investors have. Equity research analysts can assign buy or sell recommendations, meaning that you will be exposed to different parts of the investment narrative.

Develop a broad skill set that helps retain career optionality

Equity research is a career field where you get to do modeling, company analysis, as well as client management. It’s a rare job where you get to work on interpersonal skills and also learn all of the tools associated with financial analysis. As such, many people start in equity research and can move to hedge funds, private equity , corporate roles, business development, or business school.

Learn about public markets

The most distinct advantage that starting in equity research has over investment banking or consulting is that you have much more direct involvement with the stock market. As such, equity research is arguably the best training you can get t to work at a hedge fund.

Cons of Equity Research

Highly variable hours

Hours on average are better than investment banking or private equity, but hours can still be 60-80 hours during earnings season and when doing an Initiating Coverage report. The average work week is likely still in the 40-60 hour range , but the variability can be unpleasant for some.

News-driven work schedule

Like a news reporter, your workflow is highly dictated by what the companies and markets are doing. If your company is going through a lot of corporate events or a period of turbulence, you may need to spend more time writing updates and liaising with investors. Your life can be unpredictable in equity research as you have to be highly reactive to news.

Teams are very small, which may lead to you still doing grunt work as you progress

Equity research teams tend to be fairly small. Even at a large equity research firm, an industry team may only be 2-4 people. As such, even as you progress in the ranks, you will still likely have to do more of the execution grunt work such as formatting, building models, and working with editors.

Compensation is more stable but tends to be lower than investment banking

Equity research tends to have very low variability at the junior level, but salaries in general are lower than some other fields. It’s still entirely possible to make ~$300k with 5 years of experience, but it is relatively lower than fields like private equity and investment banking.

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For the first time in modern history, three of our major social institutions – work, school and family life – are all happening in one physical place: our homes. And that shift may have a greater adverse effect on women according to Shelley Correll , professor of sociology in Stanford’s School of Humanities and Sciences .

Shelley Correll, sociologist and director of Stanford’s VMware Women’s Leadership Innovation Lab. (Image credit: Drew Kelly)

“Even in the best of times, the great majority of employees report experiencing conflict between the demands of work and the demands of family,” said Correll, who is the Michelle Mercer and Bruce Golden Family Professor of Women’s Leadership and director of the VMware Women’s Leadership Innovation Lab. “For heterosexual couples, resolving this conflict is decidedly gendered, with women continuing to perform significantly more housework and childcare, leaving men more time to focus on work.”

To better understand inclusion and equity concerns during the pandemic, Correll and her team recently convened a focus group of 27 leaders from the corporate and nonprofit sectors. “We were interested in understanding how the new work-family arrangements occasioned by the pandemic are affecting employees and what organizations are doing to support their employees during these challenging times,” she said.

Correll’s research centers on gender, workplace dynamics and organizational culture including biases and barriers that limit women’s full participation in society. Here, Correll discusses some of the findings from the group’s discussions.

What do employers need to understand about the challenges around work-life balance during the pandemic?

The first thing employers need to do is adjust expectations of what productivity looks like during this time. Some of the focus group participants shared how their organizations were canceling or deferring performance reviews, recognizing that it is not possible to evaluate performance against goals set prior to the pandemic.

Second, several participants expressed the need to “center the employee at this moment.” Employers shouldn’t assume there’s a single experience for their workforce. Some employees have young children to take care of, and these families vary in their circumstances and composition. Many are increasing eldercare responsibilities. Others may be feeling extreme isolation, and some are facing mental health challenges compounded by this crisis. Many are worried about family or community members “on the front lines.” And economic anxiety is being experienced across the spectrum.

Third, employers should arm managers to support their employees. A large body of research shows that having a supportive manager can lead to greater job satisfaction, engagement, performance and lower turnover. Several of our participants stressed that managers should “lead with empathy” and “model vulnerability” by openly sharing their own concerns and challenges.

What are the particular issues around inclusion and equity that are arising now?

Going to a fully virtual workforce is creating immediate challenges. Without clear norms for communication and managing airtime on platforms like Zoom, employers report that some employees feel less visible and less able to contribute. This reinforces status dynamics that tend to favor members of the majority and leave out the contributions of underrepresented employees. There’s also a danger of replacing the value we used to place on “face time” with “Zoom time,” even though some employees may not be in a position to show up at a certain virtual meeting time.

Another issue raised in the focus groups is that the fear associated with the pandemic is increasing prejudice and discrimination. For example, Asian employees are suffering from the increase in negative stereotypes that have led to hate crimes, fueled by racist rhetoric coming from our federal government.

There are also considerations around the perception of who is showing up to help the organization through this crisis and who is unable to because of their personal circumstances. I am concerned that when organizations make layoffs they will be more likely to eliminate those who can’t live up to ideal worker norms, which is more likely to be women and people of color. We also see inequality over who is deemed to be more “essential.” In the service sector, for example, women of color have been the first hit by the wave of unemployment.

There is concern that the current economic situation will worsen workplace bullying and sexual harassment, especially when social distancing eases. When resources are scarce, as they are now, power dynamics are heightened, which makes sexual harassment by those who control resources more likely. An example is that we are hearing about graduate students struggling to secure funding, which can heighten their dependence on those who fund them. Increased dependence can be associated with increased sexual harassment.

What should companies consider doing in terms of work-from-home infrastructure, policies and communications?

Adjust performance expectations and be mindful that well-known biases in performance evaluations could be exacerbated in this crisis. What are appropriate criteria for evaluation in this “new normal”? If the answer is ambiguous, research suggests that the probability of bias will increase and further disadvantage women, people of color and others. If organizations are continuing with their performance review cycles, they should be especially mindful of providing clear criteria for managers. Several companies we talked to in our focus group are simply delaying or canceling performance review cycles.

Paying attention to the role of managers, and providing them with the right resources and skills to support employees is critical. In our research, we see that managerial decisions and behaviors are at the crux of inclusion and equity. Managers may not be used to leading a remote team and being in charge of crisis management, so they need access to frameworks and research-based insights. Providing tools and infrastructure to work from home safely is also important. At Stanford, trainings on using telework software, for example, have been useful.

How can leaders and managers best support their workers now and plan for the future?

One difficult component of this crisis is that it is a moving target. We talk about a “new normal,” but not a week goes by without another change. Managers and leaders are faced with planning for multiple future scenarios – ongoing social distancing, a partial reopening of certain sectors, or a return to “normal.”

Now more than ever, employers need to reaffirm their commitment to diversity, equity and inclusion. During past economic downturns, some leaders put inclusion goals on the back burner and focused on issues that they perceived to be more critical. If we back off our diversity and inclusion goals now, we run the risk of losing all of the gains we have worked so hard for during the past several years.

Are there any opportunities for improving inclusion and equity in the current situation?

Based on our research, we are seeing some unexpected and promising reasons to be hopeful. Several of our participants shared that this crisis has dispelled the notion that “face time” is absolutely necessary for team and individual performance and innovation.

We also have seen some great examples of online teamwork increasing inclusion when managed well and with the appropriate norms. Several of our participants reported that Zoom meetings made it easier to equalize participation. By requiring people to raise their hand on Zoom before speaking, it is easier to avoid interruptions and ensure that all voices are heard than during an in-person meeting.

We’ve also heard from executives that younger employees, who were less able to contribute to the team before, have now been stepping up and teaching organizational leaders best practices in telework and digital communication tools. Finally, employees now have more of a window into their colleagues’ lives, which we are hearing is leading to increased empathy.

In our lab, we are now focused on studying how we can solidify these new, inclusive practices as organizations create the “new normal.” As one of our participants put it, “This is a test for us for healthier times.”

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• Equity Research Analyst: The Job
• Career Paths
• Educational Qualifications
• Advanced Positions
• Additional Qualifications
• Equity Research Analyst FAQs

Equity Research Analyst: Career Path and Qualifications

Equity research analysts work for both buy-side and sell-side firms in the securities industry. They produce research reports, projections, and recommendations concerning companies and stocks. Typically, an equity analyst specializes in a small group of companies in a particular industry or country to develop the high-level expertise necessary to produce accurate projections and recommendations .

These analysts monitor market data and news reports and speak to contacts in the companies and industries they study to update their research daily.

Key Takeaways

• Equity research analysts work for both buy-side and sell-side firms in the securities industry producing research reports, projections, and recommendations surrounding companies and stocks.
• Most equity research analysts have a bachelor's degree in finance, accounting, economics, or business administration.
• Having a background in statistics and mathematics is beneficial for equity research analysts.
• Senior equity research analysts often have a master's degree. A Chartered Financial Analyst (CFA) designation, awarded by the CFA Institute, is recommended for analysts who want to move up the career ladder.

What Does an Equity Research Analyst Do?

In a buy-side firm—such as a wealth management firm , a pension fund, or a hedge fund—an equity research analyst typically supplies information and recommendations to the firm's investment managers, who oversee client investment portfolios and make final decisions about what securities to hold.

In a sell-side firm, such as a brokerage or a bank, an equity research analyst typically produces reports and recommendations for the firm's sales agents. The agents then go on to use the information to sell investments to their clients and the general public.

Analysts generally spend less time on financial modeling and more time writing reports and developing recommendations.

Career Paths in Equity Research

Most equity research analysts begin in entry-level research associate positions after completing bachelor's degree programs. Research associates work under the direction of a senior equity research analyst creating financial models and conducting research. New hires may work with a variety of analysts over the course of months as a general introduction to the job.

Most research associates are eventually assigned to a single working group covering a small group of firms. With more experience and excellent performance, associates can move directly into analyst positions, taking more active roles in the research process.

Educational Qualifications for an Equity Research Analysts

To work in equity research , a candidate must have a bachelor's degree, preferably in a relevant business discipline such as finance, accounting, economics, or business administration. Undergraduate degrees that provide in-depth quantitative training are also good options, including degrees in mathematics, statistics, engineering, and physics.

A master's degree is not required to advance into senior analyst positions. However, a master's degree in business administration or finance can help pave the way for career advancement, especially advancement into portfolio and fund management positions. 

Many equity research analyst positions require a license from FINRA.

Non-business majors should consider taking some courses in finance and other business disciplines if considering a career as an equity research analyst.

Advanced Positions in Equity Research

After several years of working in junior positions, some analysts return to school to earn master's degrees.

Although, high-performing analysts may continue into more senior research roles without returning to school. A senior equity research analyst who has a high degree of expertise in their specialty area can move into an investment management role overseeing a research team and an investment portfolio.

A portfolio manager is responsible for using the information supplied by equity research analysts and other staff to manage the mix of securities in a portfolio daily.

Other Qualifications for Equity Research Analysts

The preeminent professional qualification for equity research analysts and others working in securities research is the Chartered Financial Analyst (CFA) designation, which is awarded by the CFA Institute .

This designation requires candidates to have a minimum of 4,000 hours of qualifying experience. Consequently, it is generally considered a qualification for advancement into more senior positions in the field. The designation requires candidates to pass a series of three examinations.

Many equity research analysts require a license from the Financial Industry Regulatory Authority (FINRA) , a national body charged with oversight of securities firms and brokers. The licensing process typically requires sponsorship from an employing firm, so most analysts complete license requirements only after hiring is complete.

How Much Does an Equity Research Analyst Get Paid?

According to GlassDoor, the average salary for an equity research analyst in the U.S. in 2023 is $114,225.

How Many Hours per Week Can a Research Equity Analyst Expect to Work?

An equity research analyst can expect to work up to 60 hours per week on a typical week, which can increase to upwards of 80 hours per week during earnings season.

Who Do Equity Research Analysts Work for?

Equity research can be divided into sell-side and buy-side firms. Sell-side analysts work for investment banks and brokerages and research stocks in order to provide investment recommendations for their clients and the public. Buy-side analysts research stocks to identify investments for their own firm to invest in.

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Rookie Bankers Sour on Wall Street’s Pitch of Big Pay and Long Hours

As young professionals re-examine their work-life balance, investment banking is becoming a less popular choice despite the money.

By Kate Kelly and Lananh Nguyen

When Vince Iyoriobhe joined Bank of America’s investment banking division as a rookie analyst in 2017, he planned to stick around just long enough to get the experience needed to pursue his dream career in another corner of finance entirely — private equity.

“I knew banking was going to be tough,” Mr. Iyoriobhe, 26, said. But his attitude was: “I’m going to do it for two years and then go on to something else.”

The lure of investment banking is fading for the youngest members of the work force.

For decades, investment banking — the job of advising big companies on their most pressing needs — was one of Wall Street’s most prestigious careers, glorified in 1980s best sellers by writers like Tom Wolfe and Michael Lewis. Thousands of young hopefuls applied every year for a chance to start careers at Goldman Sachs, JPMorgan, Salomon Brothers and other banks as analysts — entry-level positions that taught aspiring financiers how to build financial models and evaluate businesses.

They embraced the long hours and grunt work in exchange for the prestige of jobs that eventually paid millions. In turn, each analyst class provided banks with a reliable pipeline of talent.

But new college graduates are increasingly unwilling to put themselves through the strenuous two-year analyst program, despite starting pay that can reach $160,000. That’s especially so as careers in technology and other parts of the finance world promise better hours and more flexibility. The pandemic, which forced many to reassess their work-life balance, has only underscored that thinking. Others, like Mr. Iyoriobhe — who put in 90-hour weeks at Bank of America, sometimes going home only to shower — are willing to do it for the minimum time necessary to put it on their résumés. He now works at a private equity firm.

“It’s kind of like going through boot camp,” said Ben Chon, a 27-year-old entrepreneur whose YouTube video about leaving his job as a health care banker in JPMorgan Chase’s San Francisco office, posted in February, has garnered more than 100,000 views.

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Primarily for accountants and aspiring accountants to learn about and discuss their career choice. Advice and questions welcome.

Private equity accountants, what your work life balance like and how does the pay and benefits compare to public?

Got a lead on an accounting manager role at a 15 person PE firm and curious what others experiences are. Also I hate public with a passion and am ready to leave.

Edit: I work in partnership tax as a senior at a top twenty firm right now.

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Work-Life balance: A perspective from Early Career Researchers

How do you feel about your work-life balance? Have you normalized overworking? In this post we share the opinions and suggestions from several early career researchers that can help you be more aware of your time management and set boundaries.

Most academic jobs come with flexible working hours which can be advantageous when researchers attempt to balance the competing obligations in their lives. Yet, when you walk into any lab, it is hard to spot an early career researcher (ECR) who only works during the hours they are paid for. What you mostly see is graduate students having dinner between experiments, postdocs going to work on weekends and PIs writing grants on their holidays. Academic culture has normalized overworking , sometimes at the expense of a social life, and of great concern, sometimes at the expense of researchers’ health and well-being. Increasing reports of mental health problems in academia starting as early as graduate school are linked to declining work-life balance , which is seen as one of the main contributors to stress. Sparing time for one’s self, family and friends is necessary for keeping a healthy, working body and mind and can improve your performance at work . However, due to the pressures, competition and increased demands, many researchers follow unwritten rules seeing a tipped work-life balance as the way to a successful career. But is it the only way?

Successful strategies need to be personalized and dynamic, while acknowledging that we work in a system and culture that place constraints on our ability to manage work-life balance as individuals.

As part of the Mentoring & Leadership Initiative of the 2019-2020 eLife Ambassador programme, we aimed to better understand the reasons behind work-life imbalance among ECRs to work towards solutions. We conducted a small survey in October 2019, asking respondents to share information about their own routines and experiences. The survey included multiple choice and open-ended questions where respondents could share their advice and opinion about attaining work-life balance. In total, fifty responses were collected from ECRs with different backgrounds, with most responses from PhD and postdoc stage researchers working in Europe and the United States. While our survey is somewhat limited due to the sample size, we were able to gain some insight and work towards building practical advice for individual researchers.

Nearly 70 percent of respondents, including those earlier and later in their career, mentioned that they struggled with work-life balance, while a further 8 percent suggested that they sometimes found striking a balance challenging (Figure 1). Looking at working routines and hours, we saw around 60 percent of our respondents worked 8 to 10 hours per day, and more than a quarter of respondents worked 10 to 12 hours per day (Figure 1), which is significantly longer than the normal working hours of academic employment contracts (40 hours a week for full time researchers in most countries). This generally aligns with recent large-scale surveys of graduate students and academics across a range of career stages that reflect a widespread culture of overwork and presenteeism. In another large scale survey , around 25 percent of respondents indicated that they typically worked between 6 to 8 hours on weekends. Nearly 80 percent of our respondents mentioned that they have worked on weekends, most indicating that they did so when deadlines approached, while some from the remaining 20 percent said they made changes to intentionally keep their weekends work-free as they reached later stages in their careers or when they became parents. When asking respondents who struggle with balance, “What do you feel like you do not have time for?”, half indicated they lacked time for rest and self-care, and/or relationships (e.g. spending time with partners, family and friends), while about a third found it difficult to fit in time for other activities (e.g. sports and hobbies), and about 20 percent struggled to keep up with general household chores (Figure 2). Even after realizing all these costs, why do many ECRs continue to overwork?

While researchers are passionate about their work, the excitement of doing research does not seem to be the driving factor behind these overworked hours. ECRs seem to suffer from anxiety around not working hard enough and progressing at a slower rate (self-declared/assessed) than their peers when they take time off. About a third of our respondents said they felt they didn’t have enough time for work and felt under pressure to be doing more. Out of all the respondents, only one attributed this to pressure from their supervisor. Comments from many respondents suggest that the race to publish and a lack of positions and funding , which are also identified by scientists as the biggest challenges to their career progression , are the drivers behind work-life imbalance. On the other hand, achieving a sense of work-life balance is dependent upon individual circumstances and values that can change over time. What works for one may not work for the other, and a solution that works now might not be particularly effective in the future. Here lies the major challenge when trying to give general advice about achieving balance - successful strategies need to be personalized and dynamic, while acknowledging that we work in a system and culture that place constraints on our ability to manage work-life balance as individuals. With this in mind, we need to tackle these issues at both personal and institutional levels.

Overworking does not equal productivity and learning how to effectively manage your time and focus while at work is critical.

To the question, “What advice would you give to your younger self?”, many replied they would have reduced overworking and would instead try to work more efficiently by planning their schedule better. Overworking does not equal productivity and learning how to effectively manage your time and focus while at work is critical. According to our survey results, effective planning and time management are key to keeping work-life balance for individuals. Specifically, many researchers purposely set boundaries, clearly defining working hours to impose temporal boundaries, as well as not taking work home to impose spatial boundaries. It is important to remember that this survey was conducted pre-COVID-19, before many of us around the world started working almost exclusively from home. It is also worth mentioning that the flexibility of working away from the office, at home or elsewhere, can be useful in maintaining balance , provided your use of time is well planned. If you are working from home, it is a good idea to set up a dedicated working space if possible, which can help keep work separate from home life. Another common practice from the survey was to schedule specific times for social activities and exercise, by arranging ahead of time with people or signing up to regular classes/courses, which made the plans harder to cancel. Although COVID-19 restrictions make this more challenging, it is still possible to schedule times to exercise at home and arrange regular activities online, which are even more important in these days when we need to find creative ways to keep social interactions. Other important suggestions from participants in the survey included learning to say no when required, and sharing and delegating responsibilities to make work assignments more manageable.

If you are working from home, it is a good idea to set up a dedicated working space if possible, which can help keep work separate from home life.

It is vital to realize that personal changes alone are not enough to solve the work-life balance issues in the research sector. As mentioned, researchers of all levels seem to enforce overworking on themselves and attribute this trait to the pressures of publishing and securing  funding . In the long run, our respondents commented on the need for increased science funding, creating more permanent research positions, and increasing the length of contracts and fellowships. Change can be brought about by a shift in research culture, where a top-down approach is necessary. Part of the solution starts with PIs encouraging the students and postdocs in their groups to keep a healthy lifestyle, and setting examples themselves . Spreading awareness about the importance of work-life balance, promoting good practices , providing management and mentorship training , and employee-friendly policies at institutes are also needed.  As one respondent captured it nicely: “Doing research is a marathon, not a sprint.” Ultimately, for the benefit of researchers and the important work that they do, both individuals and institutions need to make health and well-being a priority.

Acknowledgements

We thank Sarvenaz Sarabipour and Adriana Bankston for discussions, advice and feedback. We are extremely grateful to all the survey participants for making the time to share their opinions.

Ethics Statement

As the survey informed participants about collection and publication of anonymized answers, and posed low risk for the participants, it was given an exemption for IRB review by IST Austria Ethics Committee.

About the authors: Feyza is a PhD student at the Institute of Science and Technology Austria. She studies cell-cell adhesion using zebrafish embryos. Michael is a postdoc at Scion in New Zealand, where he studies the reproductive biology and life cycles of forest pathogens. Connect with Feyza and Michael via Twitter or email ( [email protected] ; [email protected] ).

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Equity Research Overview

A systematic process of analyzing the market position of a company to examine investment opportunities.

What Is Equity Research?

• Organization Of Equity Research Divisions
• Equity Research Report
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• Day In The Life Of An Equity Research Analyst
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Equity research can be defined as a systematic process of analyzing the market position of a company to examine investment opportunities.

Equity research (ER) professionals are in charge of analyzing, recommending, and reporting on investment opportunities that their clients, investment banks, or institutions may be interested in pursuing. 

Its main goal is to supply investors with precise financial analysis and recommendations on whether they should buy, hold, or sell a specific security. 

Analysis of a company’s financials using ratio analyses and forecasting its financials in Excel is a key part of the research process. 

It is often used to assist a bank’s investment banking and sales and trading clients by offering up-to-date, reliable information and analysis. 

Equity researchers analyze stocks in order to assist portfolio managers in making knowledgeable investment decisions. They utilize problem-solving skills, data analysis, and other tools to determine and forecast a particular security’s prospects. 

In order to assess a security’s behavioral outlook, equity researchers must quantitatively evaluate a stock’s statistical data relative to recent activity in the market. 

Other tasks of equity researchers include:

• Creating investment models and screening tools that recognize trading strategies that assist in the management of  portfolio risk .     
• Finding patterns in price changes in the current market and utilizing this data to develop algorithms that find profitable stock investment opportunities. 
• Comprehending peculiar differences among international markets so that they can analyze and compare domestic and foreign stocks. 

Key Takeaways

• Equity research is a fundamental component of the financial industry that involves analyzing and providing insights into publicly traded companies and their stocks.
• Equity researchers, often employed by investment banks, brokerage firms, or independent research firms, conduct in-depth analysis of companies to help investors make informed decisions about buying, holding, or selling stocks.
• Equity researchers analyze various aspects of publicly traded companies, including their financial performance, business operations, industry trends, competitive positioning, and growth prospects.
• Equity researchers study industry dynamics, market trends, regulatory developments, and competitive landscape to assess the potential risks and opportunities facing companies within specific sectors.

Organization of equity research divisions

If you are looking to pursue a career in ER, it is essential that you understand that it has a relatively flat organizational structure. On the other hand, investment banking is quite hierarchical. ER typically only has two main positions: Associate and Analyst. 

Equity is different from most other areas of corporate finance because the Analyst position is more senior than the Associate position. The Analyst usually has chief responsibility for covering a group of companies, and a few associates work for them. 

Typically, analysts are divided into various industry sectors to cover similar companies within a given industry. ER analysts need to have extensive specialized knowledge about the sector they work in, so most stay in one industry.

Some sectors of ER include healthcare, internet, technology, mining, telecommunications, consumer discretionary, and consumer staples. 

Usually, one team of analysts and associates covers 5 to 15 companies. Some factors that determine the number of companies a team covers include its seniority, company sizes, and industry. 

Producing reports is the main job of equity researchers. These reports may be “flash reports,” which are quick updates, or “initiating coverage” reports that are more in-depth. ER associates and analysts must be constantly publishing these reports. 

Additionally, equity researchers must be able to build financial models .

A typical ER firm also has a Head of Research who is in charge of managing the analyst team by leading, coaching, and guiding them to ensure that all goals are reached. 

The role of the Head of Research is to supervise the research reports and publications by editing and checking the accuracy of analysis and recommendations made to brokers. 

As a manager, the Head of Research is also responsible for hiring, paying, and training staff. 

Equity research report

An ER analyst arranges this document, which provides investors with insight into specific securities. In the report, analysts offer recommendations for buying or selling the security, along with its valuation and risks.

Components of an equity research report include:

1. Industry research 

This section of the report details the trends and competition in a specific industry. The industry's components to consider include the current social, political, economic, and technological environment. 

2. Overview of management and commentary 

It is essential that the report considers the nature and quality of the target’s management team. Equity researchers have direct access to management, so they have the ability to contribute value to the report. 

While individual investors do not have this ability, equity researchers can directly contact management and ask them questions about the business. They can then pass on that information to investors. 

3. Historical financial findings 

One of the fundamental tasks of ER is assessing financial results and comparing them to the guidance provided or to the analyst's expectations. 

A stock’s performance is primarily derived from reality vs. expectations. Analysts must be able to determine whether historical results were below or above market expectations. 

4. Forecasting 

Equity researchers must also be skilled in financial modeling and in producing both top-down and bottom-up forecasting. 

The top-down forecasting method first examines aspects of the industry, like its size, growth, and pricing. Then, the researcher must assess a company’s market share and eventually work down to revenue. 

The bottom-up method begins with the fundamental producers of revenue (e.g. units sold and the number of customers) and then works up to forecast revenue. 

5. Valuation 

Equity research analysts may be tasked with building financial models, such as 3-statement models and DCF models. These models are built from assumptions from the forecast and add more assumptions (e.g. valuation multiples or discount rates). 

6. Recommendations 

In this section of the report, the analyst will present a target price that advises the investors about the stock’s price in a year’s time. They also recommend whether or not the investor should buy, hold, or sell. 

The analyst will compare the security's fair price with the current market price . If the fair price is below the current market price, the security is considered overvalued , and the recommendation is to sell. 

The opposite is true if the fair price is above the current market price: the security is considered undervalued, and the recommendation is to buy. 

Equity research vs. investment banking

Investment banking has often been viewed as the top banking role for the best talent. However, many talented workers have been shifting toward pursuing management consulting , technology, or entrepreneurship because of the arduous hours required of investment bankers. 

Equity research is another great role for prospects who want to work in the financial services industry. While it is sometimes considered less attractive with lower compensation in comparison to investment banking, reality differs from this commonly-held perception.

Here are some of the key differences between equity research and investment banking.

Work-life Balance 

12-hour days are typical for equity researchers. However, their volume of work is usually highest while initiating coverage and during earnings season. 

Investment bankers have brutal hours, they commonly have 90- to 100-hour workweeks for analysts during the busiest times. 

Recently, there has been increasing backlash to the insane number of hours that investment banking analysts have to work. The common objection is that analysts experience burnout as a result of their lack of work-life balance. 

On the other hand, this complaint is rarely heard from equity researchers. 

Visibility 

ER associates and analysts often receive recognition for their work. Their names are usually on the research reports they compile for a firm’s sales force, client, and media outlets. 

Media outlets often seek out senior equity research analysts because they are recognized as experts on the companies in the sector that they cover. 

Conversely, investment bankers at the junior level do not have high visibility. However, their visibility can increase as they move up in seniority and are put on high-profile deals. 

Advancement

Investment banking has a clear path for career advancement. Analysts usually stay in their role for two to three years and then become associates for three or more years. After that, they can become vice presidents or managing directors. 

ER has a less clearly defined career path. The typical progression is from associate to analyst to senior analyst to the vice president or director of research. 

Upward mobility is more common for investment bankers because they are deal makers and service the firm’s largest clients. 

Education And Designations

A bachelor’s degree is necessary for both equity research analysts and investment banking associates. 

Typically, these degrees are in fields like economics or finance , but could also include anything from chemistry to computer science. 

However, further education and training are usually required to get a job in these fields. Equity researchers will often pursue the Chartered Financial Analyst ( CFA ) designation, which is almost considered mandatory for any equity researcher. 

Aspiring investment banking associates will typically pursue a Master of Business Administration ( MBA ) degree instead of the CFA because their role is more business-oriented. 

Many investment bankers pursue their Series 7 or  Series 63   FINRA licenses to demonstrate comprehensive knowledge of financial markets , investments, and company organization. 

Required Skill Sets

Both investment bankers and equity researchers must have excellent analytical, quantitative, and technical skills. 

However, this especially applies to equity research analysts because they must carry out complicated calculations, run projection models, and prepare financial statements with tight deadlines. 

Earlier in both careers, these professionals must practice financial modeling and in-depth analysis. However, later on, the skill sets of investment bankers and equity researchers diverge.

As they become senior, investment bankers take on more managerial and client-facing responsibilities. On the other hand, research analysts must have sufficient verbal and written communication skills to carry out analysis and due diligence . 

External Opportunities

Both professions have great external opportunities because of the extensive knowledge and skills required for these roles. 

Research analysts usually exit to the buy side , while investment bankers may end up in private equity or venture capital . The buy side includes institutional investors that purchase securities for money-management purposes. 

Compensation

Both professions are very well-paid; however, investment banking is the more lucrative career path. Investment bankers receive generous salaries and substantial sign-on bonuses. 

While investment bankers can receive commissions, research analysts are not able to be compensated for investment banking revenues. 

However, research analysts can receive bonuses that are based on the success of their recommendations, the firm’s profitability, and rankings. 

Day in the life of an equity research analyst

A day in the life of an Equity Research Analyst can be classified as a very busy one. This could include starting early and finishing late. This profession is particularly demanding. Let us see what a day in the life of an equity research analyst is like.

• Check emails from salespeople and traders.
• Analyze how all of the open global stock markets are doing.
• Assess all news that is related to your assigned industry sector.
• First, you will discuss recommendations with the sales & trading team.
• All analysts must present their research and opinions on important happenings in their sector. The head of Research will offer their opinions on the overall markets.
• Check for important developments in your sector. 
• Determine whether there have been any drastic price movements in the stock market. 
• Fulfill typical duties of a research analyst (i.e. updating financial models, completing client requests).
• Keep up to date with the news.
• Explain your work to buy-side clients.
• Analyze any movements in the market of the covered company at closure.
• Make sure the client is up-to-date with any relevant market information.
• Start a new research publication piece for the next few days.
• Typically, a research analyst will complete 1 to 2 research pieces per week.
• Unless there is an earning season, the analyst may now go home. 
• In the case that it is earnings season, the analyst must prepare the result update report for the next morning. 

Who funds equity research?

Independent ER firms do not have a sales & trading division. As a result, they carry out financial analysis and charge a fee on a per report basis. At major ER firms, brokerage trades earn  fee income . 

Fee income refers to the revenue that is created by a business operation by charging its customers a fee. 

Brokerage firms (made up of investment banks and stock brokers) give investment ideas to their clients ( mutual funds , institutional investors, and retail investors) and in turn, brokerage firms receive equity trades from their clients. 

Buy-side firms include hedge funds, insurance companies, and pension funds (among other things). Sell-side firms are typically investment banks (e.g. Goldman Sachs , Credit Suisse , JPMorgan Chase , etc.) 

The role of the buy-side firm is to manage the portfolio of security and seek advice on investment decisions from sell-side analysts. This advice is given to the buy-side analysts for free.

If the buy-side firm decides to invest in the security, it may want to carry out the trade through the sell-side firm’s trading division. 

In turn, the trading division of the sell-side firm will receive a commission for executing the trade at the lowest price. 

As a result, the commission is the earnings of the research firms. 

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• Actuarial Science
• Hedge Fund Manager
• Summer Analyst Job Description
• TMT Investment Banking

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