How can you become an Equity Research Analyst, and what does the job entail?

The financial market has experienced remarkable growth in recent years, leading to numerous employment opportunities. Thus, it's no surprise that more and more individuals aspire to carve out a career in the equity market. If you possess the right qualifications and experience, there are many avenues to explore in this field. One such avenue is becoming an Equity Research Analyst, a crucial post within financial firms requiring a person with vast skills and experience. You can also get on this career path with the proper training and education. An Equity Research Analyst is responsible for analyzing financial data to assess publicly traded companies' performance and provide investment recommendations to their clients. Equity Research Analysts are an essential part of the research division in investment banking firms. In a recent survey, 32% of respondents said they work in Equity Research, making it the most common job function for CFA charter holders!

Did you know the Equity Research Analyst job market is highly competitive? But, a recent study states that the demand for Equity Research Analysts is expected to increase as more companies go public and require analysis of their stocks. So, if you are keen on this field, this blog is for you! It's time we dive in and explore the different aspects of this exciting career path, from the rigorous training and education process to the skills and experience needed to succeed in the job market.

Equity Research: What is it?

Equity Research is a field within finance that involves analyzing publicly traded companies and their financial data to assess their performance and potential future outcomes. Equity Research plays a crucial role in the investment decision-making process, as it provides valuable insights into companies' financial health and growth potential, which can guide investment decisions. Equity Research analysts often work closely with investment bankers and traders to provide necessary insights.

One of the essential aspects of Equity Research is the creation of equity research reports, which are used by investors to make informed decisions when buying or selling stocks. These reports typically include a detailed analysis of a company's financials and the analyst's outlook and recommendation for the stock. To conduct Equity Research, investment banks, and brokerage firm analysts delve into a company's financial statements, market trends, and industry competitors. Using various valuation techniques, they asses the company's future earnings potential and growth prospects.

According to a recent study, the global Equity Research market is projected to reach $4.7 billion by 2025, driven by the increasing demand for investment research and the growing popularity of passive investing. This clearly expresses how important Equity Research is in today's world.

Equity Research: Various Career Paths

Equity Research is very versatile. Some various firms and companies offer well-paid positions to Equity Research analysts. However, these firms can be broadly divided into buy-side or sell-side.

Buy-Side: The firms that reside on the Buy-side are usually concerned with managing various portfolios and making accurate investments. If you are working on Buy-side firms, your responsibility is to collaborate with investment bankers and help your clients to enhance their wealth.
Sell-side: These firms are more concerned with complex research and analysis of the market. If you become a part of the firm on the sell side, your job will be to conduct in-depth analysis and research to help buy-side analysts make their decisions for their clients.

While we can divide firms broadly into these two varieties, it's important that you know what type of firms you can be hired in particular. If you are an equity research analyst, you will become a part of the research division of any of these firms:

Investment banks
Insurance companies
Asset management companies
Investment advisory firms or
Boutique investment firms

Now that we are clear about the career path you can take as an equity research analyst, let's look at how you can start your career as an equity research analyst.

Equity Research: How to start?

Qualification

Equity Analysis is an exciting and dynamic field, and with the right skills and qualifications, you can make a successful career in this industry. Even though there aren't any specific qualifications required to start your career in this field, having a strong educational background in finance, accounting, or economics can be helpful. Many employers also prefer candidates with a Master's degree or professional certification, such as the Chartered Financial Analyst (CFA) designation, which is a professional certification. So, you can choose either of these options to become an Equity research analyst.

How to enter the industry?

Once you have the necessary education and qualifications, you can gain relevant experience by working as an intern or entry-level analyst in an investment bank or brokerage firm. Obtaining an MBA can make your journey even more accessible as many big investment banks and firms visit MBA campuses yearly to recruit interns and provide job placements for deserving candidates.

As you gain experience, you can specialize in a specific industry or sector, such as technology or healthcare. Specializing in a particular sector can help you become a subject matter expert and increase your chances of advancing in your career. Freelancing can be your next step in gaining expertise in a particular field. It makes your resume attractive and helps you expand your knowledge with various projects.

Lastly, creating a network is very crucial in this field. You can start by attending industry events, participating in professional organizations, and building relationships with industry experts to help you stay up-to-date with the latest trends and developments and expand your career opportunities!

Equity Research Salary: What to Expect?

The top-paying industries for Equity Research Analysts include investment banking, securities, commodities, and financial services, with average salaries ranging from $88,000 to $110,000 per year. However, In India, the average base salary for equity research analysts, regardless of work experience, ranges from Rs. 4,03,159 to Rs. 8,29,142 per year, according to Glassdoor, LinkedIn, and PayScale.

Conclusion

Equity Research is critical in investment banking, analyzing and evaluating stocks for reporting purposes. Major Wall Street firms like JP Morgan, Morgan Stanley, and Goldman Sachs have established equity research departments where you can wish to work. Equity research analysts specialize in covering various industries, focusing on similar firms or single companies. Their research involves analyzing a company's performance, management, finances, and potential. With the rapid growth of the financial market, a career in Equity Research can be a lucrative and rewarding path for those with a passion for finance and a strong analytical mindset.

So, are you considering a career as an equity research analyst in the investment banking industry? If so, consider enrolling in HRD Skill's comprehensive e-learning course in Investment Banking. Our course is tailored to meet the HRDC guidelines for human resource development and skill training, making it an ideal choice for aspiring investment banking professionals!