Equity Research

Equity research professionals are best known for the reports they publish, but the senior staff (“Research Analysts”) in these groups spend most of their time developing new business and pitching their research, as well as presenting their insights to management teams and institutional investors.

More junior team members (“Equity Research Associates”) are more likely to devote a higher proportion of their day to research, modeling and report writing.

Equity Research Reports

If you want to understand Equity Research Reports, you have to understand first why banks publish them: to earn higher commissions from trading activity.

A bank wants to encourage institutional investors to buy more shares of the companies it covers. Doing so generates more trading volume and higher commissions for the bank.

This is why Equity Research Reports most often contain “Buy” ratings and why they seldom, if ever, contain “Sell” ratings.

Read more in our full article on Equity Research Reports here or check out this video tutorial:

In equity research, recruiting is more random and unstructured than in investment banking.

The large banks may do some undergraduate and MBA-level recruiting, but they fill many of their spots “as needed”.

Equity research internships do exist, but they’re somewhat different from IB and S&T internships and do not necessarily lead directly to full-time offers.

It’s hard to pin down the timing of the ER recruiting process, but it’s safe to say that it’s not quite as hyper-accelerated as the IB recruiting process.

You’ll still go through first-round interviews, often on the phone or via video, and then proceed to Superday interviews at the bank.

Read more about Equity Research Recruitment in our in-depth article.

• 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.
• VP-level professionals earn between $200K and $300K, again with 75%+ from their base salaries.
• 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.
• MDs could earn between $500K and $1 million, with base salaries in the $250K – $600K range.
• 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.

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.

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.

Read our full article on Equity Research Careers here.

The bad news is that it is almost impossible to break into private equity directly from equity research. It’s far easier to transfer into investment banking first if you want to go that route.

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.

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

Equity Research has become a highly-competitive and sought-after field.

The sector is much smaller than, for example, investment banking, which means there are many skilled applicants seeking a smaller pool of jobs.

That’s why many future equity research professionals invest in specialized courses and training to help them get noticed, get hired, and get promoted.

Some of the courses offered by Mergers & Inquisitions and Breaking Into Wall Street tha are relevant to Equity Research include:

• BIWS Premium
• BIWS Platinum