Typical Day: Equity research analysts start their day by attending various conference calls with firm’s traders and brokers, before the markets open. In these calls they discuss and share the investment recommendations for clients. They have to prepare the research reports and equity recommendations. Till this time they spend a good part of the day doing research on the sector or industry or companies they cover. An analyst has to spend a great deal of time communicating with company’s management, retail sales force etc. To collect the information, they often visit companies and attend various industry conferences. They then analyze the information collected, to review financial statements, estimate earnings and profits of the company. Using this knowledge they prepare detail report with recommendations and complex financial models. Thus the day begins quite early but extends late into the night. Also the equity research staff needs to keep themselves informed with the latest updates.
Investment Banks like Goldman Sachs, JP Morgan Equity, Morgan Stanley, Credit Suisse, and Deutsche bank are the main recruiters for their division of equity research. Financial research opportunities are not limited to investment banking. Mutual funds, asset management firms, commercial banks, insurance companies, and pension funds all hire research analyst and associates to analyze their investment direction.
What the interviewers look for in the candidate:
Candidates are expected to be well versed not only in finance, but also in accounting, corporate strategy, and the latest issues and regulations in the industry. An equity research associate must be multi-faceted because investment recommendations will involve staying on top of all the news related to the industry or company coverage, as well as broader industry trends and general market research. For an analyst, firms like GS, JP Morgan also emphasize on creative problem solving abilities and networking capabilities. Firms prefer people who are either CFA candidates or Charter holders. Since the analyst’s main role is to gather the data from different firms and make reports, good communication and writing skills are very essential for this job. An analyst is required to work and analyze the equity market round the clock. People who are smart, highly energetic and hard working with strong analytical skills are always preferred. The market information awareness is a must. Typically MBA’s, CA’s and engineers with CFA or other certifications are recruited for this position.
Salary and Bonus:
Career in equity research can lead to great financial rewards. Initial salaries are comparable to those in investing banking, and the potential upside is great. The average salary for an analyst profile is 5 Lpa which increases exponentially with experience and qualifications. Increasingly a major element of remuneration is related to performance or profits and received as an annual bonus. Also there are many opportunities to travel and work abroad.
- A good salary.
- Ample of opportunities in other areas if one wants to move out of research.
- Pretty stable working hours.
- Long hours in front of the computer terminal.
- Sedentary lifestyle.
- Pressure from different departments inside the company and clients.
Most people entering as fresher’s start as trainee but if you are a Level 1 CFA or higher you may directly make it to the associate level.
- Trainee:Training is an important part of research firms for helping new employees learn the necessary skills for their chosen division. The duration and content varies significantly according to where you end up working. It extends typically from 6 months to 1 year, which involves lectures, workshops, case studies and on-the-job training.
- Associate: The trainees or the candidates with 1-2 years of work experience in finance field or with CFA level 1 or 2 cleared are recruited for this profile. Analysts provide written reports and company/industry opinions to the buy-side. Ideas and insights are passed on to sales for mass distribution. It requires frequent interaction with buy side clients via phone or office visits.
- Senior Analyst: After a few years as associate one becomes a Senior Analyst. Senior Analysts have much more interaction with Buy-side (e.g. company road show: accompany CEO of company around country to meet with top buy-side clients)
Generally the career path for research analyst is not fixed. They may work as Associate for three years and work as analyst for several years before being promoted to the post of VP. Most people move to other opportunities like joining the buy-side, become Portfolio Manager or move into Sales or to the Industry (i.e. become executive at Software firm or consumer goods firm etc.). Thus, many options are available. People coming out of a strong research group are highly regarded wherever they go.