Equity Market Analyst Career and Industry Insights

As an equity market analyst, you'll have the opportunity to work with a wide range of companies, from small startups to large corporations.

Equity market analysts typically work in investment banks, asset management firms, or research institutions, providing critical insights to help organizations make informed investment decisions.

Their work involves analyzing financial statements, market trends, and economic indicators to identify potential investment opportunities.

You'll need a strong understanding of financial markets, accounting principles, and statistical analysis to succeed in this role.

Equity market analysts often specialize in specific industries or sectors, such as technology or healthcare, allowing them to develop in-depth knowledge and expertise.

In the United States, the Bureau of Labor Statistics reports that employment of financial analysts, including equity market analysts, is projected to grow 5% from 2020 to 2030, which is slower than the average for all occupations.

An equity market analyst is a financial professional who studies and interprets data to help investors make informed decisions about buying and selling stocks and bonds.

Equity market analysts work with companies, banks, and other financial institutions to provide research and analysis on the performance of stocks and bonds.

Their primary goal is to identify trends, patterns, and potential risks that could impact the value of these investments.

Equity market analysts use various tools and techniques, including financial modeling, statistical analysis, and market research, to make informed predictions about the future performance of stocks and bonds.

They often work closely with portfolio managers, investment bankers, and other financial professionals to provide guidance on investment decisions.

Equity market analysts must have a strong understanding of financial markets, economic trends, and company performance to provide accurate and reliable analysis.

A bachelor's degree in finance, economics, or a related field is typically required to become an equity market analyst, and many also hold advanced degrees or certifications, such as the Chartered Financial Analyst (CFA) designation.

To become an equity research analyst, you'll need a bachelor's degree in a relevant field like finance, accounting, economics, or business administration. A master's degree can be helpful for career advancement, especially in portfolio and fund management positions.

Many equity research analyst positions require a license from FINRA. Non-business majors can still consider a career in equity research by taking courses in finance and other business disciplines.

A few years of experience can lead to associate positions, where you'll take on greater client-facing responsibilities and mentor junior analysts.

A bachelor's degree in a relevant business discipline, such as finance or accounting, is typically required to work as an equity research analyst.

Many equity research analyst positions require a license from FINRA, which is a regulatory body.

Non-business majors can still pursue a career in equity research, but they should consider taking courses in finance and other business disciplines to gain relevant knowledge.

A master's degree in business administration or finance can be beneficial for career advancement, especially into portfolio and fund management positions.

After several years of working in junior positions, some analysts may choose to return to school to earn a master's degree.

Most equity research analysts begin their careers in entry-level research associate positions after completing bachelor's degree programs. They work under the direction of a senior equity research analyst creating financial models and conducting research.

Research associates typically work with a variety of analysts over the course of months to gain a general introduction to the job. With more experience and excellent performance, associates can move directly into analyst positions, taking on more active roles in the research process.

Entry-level analysts in equity capital markets start by supporting senior team members, gradually taking on more responsibility as they gain experience. This initial phase is crucial for building a strong foundation in financial analysis, market research, and client interaction.

As analysts demonstrate their capabilities, they often move into more specialized roles, such as sector-specific analysts, where they focus on industries like technology, healthcare, or energy. With a few years of experience, many analysts transition into associate positions.

In associate positions, analysts take on greater client-facing responsibilities, including leading presentations and managing smaller transactions. Associates often mentor junior analysts, providing guidance and sharing insights gained from their own experiences.

With further expertise, analysts may advance to vice president or director roles, overseeing larger deals, managing client relationships, and contributing to the strategic direction of the firm. At this level, professionals are expected to have a deep understanding of market dynamics and a proven track record of successful transactions.

Equity capital markets analysts have a demanding role that requires a deep understanding of financial markets and corporate finance. They must conduct thorough market research and analysis to provide valuable insights that inform investment decisions and strategies.

Market research involves scrutinizing market trends, evaluating economic indicators, and assessing the financial health of companies. Analysts must be able to distill intricate data into clear, concise, and actionable insights.

Proficiency in software tools like Microsoft Excel, Bloomberg Terminal, and financial modeling software is indispensable for equity capital markets analysts. They use these tools to prepare detailed financial reports and presentations.

Effective communication is essential for analysts, who must be able to articulate their findings and recommendations both in writing and verbally. They collaborate with other departments, such as sales and trading, to ensure that all stakeholders are aligned and informed.

Time management and organizational skills are crucial for analysts, who often work under tight deadlines. They must be able to juggle multiple projects simultaneously while maintaining a high level of accuracy and attention to detail.

In a buy-side firm, equity research analysts typically supply information and recommendations to investment managers, who oversee client investment portfolios and make final decisions. In a sell-side firm, analysts produce reports and recommendations for sales agents, who use the information to sell investments to clients and the general public.

Analysts spend less time on financial modeling and more time writing reports and developing recommendations. Their role in IPOs and offerings involves conducting due diligence, evaluating market trends, and advising on pricing strategy. They also help draft the prospectus and participate in roadshows to market the IPO.

In an equity research division, the organizational structure is fairly flat, unlike investment banking. This means that the two main positions, Associate and Analyst, are relatively equal in terms of hierarchy.

Associates work under the supervision of an Analyst, who is responsible for covering a group of companies. Typically, an Associate works for one Analyst, while more senior Associates may work with multiple Analysts.

Industry sectors are a key part of equity research, with Analysts divided into sectors to cover similar companies. Some of the largest sectors include consumer staples, consumer discretionary, and technology.

Equity research analysts work in two main settings: sell-side and buy-side firms. Sell-side analysts work for investment banks and brokerages.

In the sell-side, analysts research stocks to provide investment recommendations for their clients and the public. This involves creating reports and analyses to help investors make informed decisions.

Sell-side firms include investment banks and brokerages, which are responsible for facilitating stock trades and providing financial services to clients.

Buy-side analysts, on the other hand, research stocks to identify investments for their own firm to invest in. They work for companies that manage large portfolios of stocks and other securities.

Here's a breakdown of the two main types of firms that equity research analysts work for:

Ultimately, the type of firm an equity research analyst works for will depend on their specific role and responsibilities.

The organizational structure of equity research is relatively flat, meaning there's not a steep hierarchy like you might find in investment banking. In fact, the two main positions in equity research are Associate and Analyst.

Associates are typically junior and work under the guidance of an Analyst, who has overall responsibility for covering a group of companies.

Analysts are usually divided into industry sectors to cover similar companies within an industry. This specialization allows analysts to become experts in their field.

Some of the largest sectors in equity research include consumer staples, consumer discretionary, internet, healthcare, energy, mining, technology, and telecommunications.

A team of associates and an Analyst will usually cover at least 5 companies and could cover as many as 15, depending on their seniority, the sizes of the companies, and the industry.

Employee work hours can be quite demanding, especially in certain roles. A research equity analyst can expect to work up to 60 hours per week on a typical week.

Earnings season can be particularly grueling, with work hours often increasing to upwards of 80 hours per week.

As an equity market analyst, you can expect a competitive salary. The average salary for an equity research analyst in the U.S. in 2023 is $114,225.

Compensation can vary greatly depending on your level within the company. At the low end, VP-level Analysts might earn around $200K to $300K USD, while Directors move up to the $300K to $600K range, and Managing Directors (MDs) go up to the $500K to $1 million range.

Around 50% of this compensation comes in the form of base salary, and it’s up to 75% at the lower levels. This means that even at the lower levels, you can still earn a significant portion of your income as base pay.

The salary and lifestyle of an equity research analyst can vary greatly depending on their level and experience. The average salary for an equity research analyst in the U.S. in 2023 is $114,225.

At the lower end of the spectrum, Vice President-level Analysts can earn around $200K to $300K USD per year at large banks in major financial centers.

Directors move up to the $300K to $600K range, and Managing Directors go up to the $500K to $1 million range.

Around 50% of this compensation comes in the form of base salary, and it’s up to 75% at the lower levels.

Analysts typically work long hours, often 50-70 hours per week, with 12-hour days on average, and longer hours during earnings season.

They also have to travel frequently for client visits, conferences, and company meetings, which can add to the stress of the job.

A long-term career in equity research is probably not worth it in the 2020s unless you truly love it and can't imagine doing anything else.

There's serious skepticism about the long-term future of equity research, which should give you pause.

Research is still a great entry point into finance because of the lack of a standard hiring process, but it's not a career I would recommend unless you're extremely passionate about research.

The negative trends in equity research affect the industry as a whole, not just specific desks or groups, which is a major concern.

There are still opportunities in sales & trading, especially if you're a programmer or work with more mathematically complex products, but equity research doesn't offer the same level of flexibility.

Unless you're a die-hard research enthusiast, it's hard to see the value in pursuing a career in equity research.