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Equity Research vs. Investment Banking: What's the Difference?

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Equity Research vs. Investment Banking: An Overview

Investment banking may no longer be the undisputed first choice for the best and brightest. Instead of streaming into investment banking , many top graduates are now opting for careers in management consulting, technology, or launching their own startups. While the allure of investment banking may have dimmed, due to long hours and a stressful work environment, the industry still attracts many workers. Equity research is also another destination for prospective financial employees.

Equity research is sometimes viewed as the unglamorous, lower-paid cousin of investment banking. The reality, though, differs from this widely held perception. In order to help you formulate your own opinion, here's a head-to-head comparison of equity research (sell-side research that is conducted by the research departments of broker-dealers) and investment banking in 10 key areas.

Key Takeaways

A career in finance can take many paths, including investment banking and equity research.
Investment bankers work on M&A deals and issue new securities to the market.
Equity researchers conduct thorough analysis and research of companies and their share price to issue investment recommendations.
Each role has different responsibilities and hours, which will suit prospective candidates differently.
The pay for investment bankers is a bit higher in the early career stage, especially when bonuses are included, and this gap further widens over the course of a career.

Equity researchers analyze stocks to help portfolio managers make better-informed investment decisions. Equity researchers employ problem-solving skills, data interpretation, and various other tools to understand and predict a given security’s behavioral outlook.

This often involves quantitatively analyzing a stock’s statistical data in relation to recent market activity. Finally, equity researchers may be tasked with developing investment models and screening tools that identify trading strategies that help manage portfolio risk .

Equity researchers are responsible for identifying patterns with current market price changes and using this information to create algorithms that identify profitable stock investment opportunities. The equity researcher should be able to understand the idiosyncratic differences between various international markets in order to cross-compare domestic and foreign stocks.

The low end of the salary range is $52,000, while the high end sits at $147,000. The average salary is over 93,000 as of 2024. Private equity firms and other financial services companies are the chief employers of equity researchers. The majority of these jobs are based in New York City, although firms are increasingly offering positions in major metropolitan hubs like Chicago, Boston, and San Francisco.

Investment banking is a specific division of banking related to the raising of capital for other companies, governments, and other entities. Investment banks underwrite new debt and equity securities for all types of corporations; aid in the sale of securities; and help to facilitate mergers and acquisitions , reorganizations, and broker trades for both institutions and private investors.

Investment banks also provide guidance to issuers regarding the issue and placement of stock. Investment banking positions can include elements of consulting, banking, capital market analysis, research , trading, and much more. Each requires a specific skills to be developed.

A degree in finance, economics, accounting, or mathematics is a good start for an investment banking career. However, most investment banking jobs focus their recruiting on elite universities.

Those interested in investment banking should strongly consider pursuing a Master of Business Administration (MBA) or other professional qualifications.

Great people skills are a huge positive in any investment banking position. Even dedicated research analysts spend a lot of time working as part of a team or consulting with clients. Some positions require more of a sales touch than others, but comfort in a professional social environment is key. Other important skills include communication skills (explaining concepts to clients or other departments) and a high degree of initiative.

1. Work-Life Balance

Equity research is the clear winner here. Although 12-hour days on weekdays are the norm for equity research associates and analysts, there are at least phases of relative calm. The busiest times include initiating coverage on a sector or specific stock, and earnings season when corporate earnings reports have to be analyzed rapidly.

The hours in investment banking are almost always brutal, with 60-80 hours per week being a baseline for investment banking analysts (the lowest on the totem pole). During busy times, work weeks can be up to 100 hours or more.

There has been a growing backlash against the atrocious hours demanded by investment banking analysts. In response, Goldman Sachs has enacted a rule guaranteeing that bankers will not have to work between 9 p.m. Friday and 9 a.m. on Sunday. These restrictions may do little to change the "work hard, play hard" culture of investment banking.

The most common complaint of those who have quit investment banking is that the total lack of work-life balance leads to burnout. That complaint is seldom heard from those employed in equity research.

Major financial jobs tend to be concentrated in major financial hubs such as New York, Chicago, London, and Hong Kong. This is no different for equity research analysts and especially investment bankers, many of whom are paid to relocate to their firm's home city.

2. Visibility

Equity research is the winner in this area as well. Associates and junior analysts often receive recognition for their work by being named on research reports that are distributed to a firm's sales force, clients, and media outlets.

Since senior analysts are recognized experts on the companies they cover in a sector, they are sought after by the media for comments on these companies after they report earnings or announce a material development.

Investment bankers, on the other hand, toil in relative obscurity at the junior level; however, their visibility increases significantly as they climb the investment banking ladder, especially if they are part of a team that works on large, prestigious deals.

3. Advancement

Investment banking wins in this area. There is a clear path with defined time frames for career progression in investment banking. This begins with the analyst position (two to three years), then transitions to an associate position (three-plus years), after which one is in line to become a vice president and eventually director or managing director.

The career path in equity research is less clearly defined but generally goes as follows—associate, analyst, senior analyst, and, finally, vice president or director of research. Within the firm, however, investment bankers probably have better prospects for reaching the very top, since they are deal makers and manage relationships with the firm's biggest clients.

Research analysts, on the other hand, might be viewed as number crunchers who do not have the same ability to bring in big business.

4. Job Functions

Investment banking probably wins here as well, albeit only over the longer term. Equity research associates start off by doing a lot of financial modeling and analysis under the supervision of the analyst who is responsible for the coverage of a specific sector or group of companies.

Also, associates also communicate to a limited extent with buy-side clients, top management of the companies under coverage, and the firm's traders and salespeople. Over time, their responsibilities evolve to less financial modeling and a greater degree of report writing and formulating investment opinions and theses; however, there isn't a great deal of variability in the job functions of associates and analysts. What varies is the relative time spent on these functions.

Investment bankers, on the other hand, spend the first few years of their careers immersed in financial modeling, comparative analysis, and preparing presentations and pitchbooks . But as they climb the ladder, they get the opportunity to work on exciting deals such as mergers and acquisitions or initial public offerings.

Research analysts only get this opportunity occasionally, when they are brought "over the wall" (the "wall" refers to the mandatory separation between investment banking and research) to assist on a specific deal involving a company that they know inside out.

5. Education and Designations

A bachelor's degree is a must for any aspiring equity research analyst or investment banking associate. Common areas of study include economics, accounting, finance, engineering, computer science, mathematics, or even physics. While it is possible to get hired with just a bachelor's degree, further qualifications can be used to get hired. They are also great for furthering one's career.

The difference between an equity researcher and an investment banker is determined by what post-graduate credentials are usually obtained. Most equity researchers earn a Chartered Financial Analyst (CFA) designation and most investment bankers get a Master of Business Administration (MBA) degree.

The CFA, widely regarded as the gold standard for security analysis, has become almost mandatory for anyone wishing to pursue a career in equity research. But while the CFA can be completed at a fraction of the cost of an MBA program, it is an arduous program that needs a great deal of commitment over many years. Being a self-study program, the CFA does not provide an instant professional network as an MBA class does.

The MBA curriculum, by virtue of being more business-oriented and less investment-oriented than the CFA, makes it more suitable for the investment banking profession; however, the competition to get into the best business schools—which is where most Wall Street firms hire their associates—is intense. Many aspiring investment bankers enter into some other financial field, perhaps working as analysts or advisors, and work toward their MBA.

Investment Bankers are required to pass the FINRA Series 79 Investment Banking Representative Exam.

6. Skill Sets

Both jobs require a great deal of analytical and mathematical/technical skills, but this especially applies to equity research analysts. These analysts need to be able to perform complex calculations, run predictive models, and prepare financial statements with quick turnarounds.

As noted earlier, financial modeling and in-depth analysis are common to both investment bankers and research analysts in the earlier stages of their careers. Later on, the skill sets diverge, with investment bankers required to be adept at closing deals, handling large transactions, and managing client relationships.

Research analysts, on the other hand, need to be effective at both verbal and written communication and have the ability to make balanced decisions based on rigorous analysis and due diligence .

7. External Opportunities

Successful research analysts and investment bankers generally have no shortage of external opportunities because of their experience, knowledge, and skills. Research analysts are likely to gravitate toward the buy-side (i.e., money managers, hedge funds, and pension funds), while seasoned investment bankers usually join private equity or venture capital firms.

8. Barriers to Entry

Both investment banking and equity research are difficult areas to get into, but barriers to entry may be slightly lower for equity research. Investment banking tends to draw more applications, due to prestige and higher pay.

9. Conflicts of Interest

Although investment bankers and research analysts both have to steer clear of conflicts of interest , this is a bigger issue in equity research than in investment banking. This was highlighted by the U.S. Securities and Exchange Commission's (SEC) enforcement actions against 10 leading Wall Street firms in 2003, relating to analyst conflicts during the telecom/dot-com boom and bust of the late 1990s and early 2000s.

Under the settlement, the firms paid disgorgement and civil penalties totaling $875 million, among the highest ever imposed in civil securities enforcement actions. The 10 firms also had to agree to undertake a host of structural reforms designed to completely separate their research and investment banking arms.

10. Compensation

Both investment banking and equity research are well-paid professions, but over time, investment banking is a much more lucrative career choice.

Investment bankers are famous for their high pay and large signing bonuses. According to the online finance community "Wall Street Oasis," summer interns earn the equivalent on a pro-rata basis of around $77,000, plus a signing bonus of around $6,000 . First-year analysts earn an average salary of $80,239 in 2024, plus bonuses, according to PayScale.

Total compensation will vary greatly depending on job location, company, and the employee's performance review.

The real moneymakers, however, are investment banking associates, who earn between $150,000 and $200,000, with a 50% to 100% bonus. It is not unusual for total compensation for a senior vice president or managing director to exceed $400,000 annually.

The average equity research analyst earns over $93,000 in annual compensation in 2024, according to PayScale, plus a bonus. While it's higher than investment banking analysts starting out, this profession doesn't typically see the same magnitude of bonuses or salary growth as the career progresses. Research analysts indirectly generate revenues through sales and trading activities that are based on their recommendations.

The reputation of a firm's research department may be a significant factor in swaying a company's decision when selecting an underwriter when it has to raise capital. But even though the investment firm may make a substantial amount through underwriting fees and commissions, research analysts are prohibited from being compensated directly or indirectly from investment banking revenues.

Instead, research analysts are compensated over and above their salaries from a bonus pool. These periodic bonuses are determined by a number of factors including trading activity based on the analysts' recommendations, the success of such recommendations, the profitability of the firm, and its capital markets division and buy-side rankings.

Nonetheless, due to larger bonuses, entry-level investment bankers may receive total compensation that is higher than their research counterparts, and this gap may widen markedly over time.

Is Equity Research the Same As Investment Banking?

No, equity research is not the same as investment banking. Both jobs have similarities but clear distinctions in overall purpose. Equity researchers evaluate companies with the goal of making investment recommendations. They analyze a company in all aspects, from its financials to its competition to its industry outlook, and its share price, to determine how the company might perform in the future and how its share price might move. Investment bankers also analyze companies in a similar fashion, but their goal is to determine whether a company is suitable for a merger or acquisition.

What Skills Do You Need for an Equity Research Job?

The skills required for an equity research job include an understanding of finance, economics, and accounting. An equity researcher must be able to analyze a company's financial statement. Equity researchers should also know financial modeling, Excel, and valuation methods. In addition to the quantitative skills required, equity researchers should be able to write well as they will be writing investment recommendations based on their quantitative analysis.

How Many Hours Does an Equity Research Associate Work?

An equity research associate typically works 55 to 60 hours per week, which can increase to 70 to 80 hours per week during earnings releases. Typically, equity researchers do not need to work weekends. The hours for an equity research associate or analyst are often less than that of an investment banker, who often has to work weekends.

Overall, if one has to make a choice between embarking on a career in equity research versus one in investment banking, factors such as work-life balance , visibility, and barriers to entry favor equity research. On the other hand, factors like prospects for advancement, job functions, and compensation tilt the scales in favor of investment banking. Ultimately, however, the choice comes down to your own skill set, personality, education, and ability to manage work pressures and conflicts of interest.

Payscale. " Average Equity Analyst Salary ."

Mergers and Inquisitions. " The Equity Research Associate: Remnant of a Dying Industry, or the Hero That Gotham Deserves ."

Career Principles. " Investment Banking Hours: The 100-Hour Work Week ."

Forbes. " After Complaints of ‘100-Hour’ Workweeks, Goldman Sachs Is Allowing Bankers To Take Off on Saturdays ."

FINRA. " Series 79 – Investment Banking Representative Exam ."

U.S. Securities & Exchange Commission. " Ten of Nation's Top Investment Firms Settle Enforcement Actions Involving Conflicts of Interest Between Research and Investment Banking ."

Wall Street Oasis. " What Is a Summer Analyst (SA)? "

PayScale. " Average Investment Banking Analyst Salary ."

Wall Street Oasis. " Investment Banker Salary & Compensation, Average Bonus in Banking ."

PayScale. " Average Equity Analyst Salary ."

U.S. Securities and Exchange Commission. " Commission Approves Rules To Address Analyst Conflicts; SEC Also Requires Edgar Filings by Foreign Issuers ."

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The Equity Research Associate: Remnant of a Dying Industry, or the Hero That Gotham Deserves?

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Many people do not understand what equity research (ER) means, or they conflate it with other industries that happen to have “equity” in their names.
Many sources mix up the Associate and Analyst roles, or they mistakenly assume that “Associate” means the same thing that it does in investment banking or private equity .
And then other sources have not updated their coverage to reflect the post-MiFID II world and how the entire industry is changing.

We’re previously covered equity research careers and equity research recruiting , so this article will build on those and cover the Associate role in detail:

The Equity Research Associate Job Description

In sell-side equity research at an investment bank, you analyze public companies, speak with management teams and investors, and make Buy, Sell, and Hold recommendations on stocks.

Although the division is best known for its equity research reports , the reports are not the key “value add.”

Instead, institutional investors value equity research professionals mostly for additional “color” or “nuggets” they can extract from management teams and then relay.

Particularly if someone at a hedge fund or asset management firm covers dozens of names, that person will not have time to dig into every last nuance of each company.

Research professionals can add value by relaying information and even setting up meetings between management and current or prospective investors.

This setup remains the same even though institutional investors now pay directly for the reports (because of MiFID II ) – it’s just that these services are now limited to paying clients.

In research, the senior staff are called “Analysts,” and the junior team members are “Associates” or “Research Associates” – the opposite of the investment banking hierarchy .

But those are just the external titles; within the “Analyst” title, you can still advance from the VP level up to the MD level internally.

And “Analysts” at different internal levels get paid differently and have slightly different responsibilities.

As an Associate , you’ll be responsible for supporting the Analyst in your group.

Research groups vary widely because each Analyst runs his/her group differently, but “support” includes tasks such as:

Speaking with market participants (management teams and investors).
Doing industry research (e.g., collecting data on market share, pricing, etc.).
Writing the reports (both short, update reports and longer thought pieces).
Building models and valuations.
Determining market sentiment.

The Equity Research Analyst does more relationship building (#1 and #5 in the list above) and sets the overall direction and culture of the group, while the Associate faithfully executes orders (#2 to #4 in this list).

But if you want to advance to the Analyst level, you’ll need to start interacting with management teams, setting up meetings, and developing your reputation with institutional investors.

Therefore, you need to strike a delicate balance between “doing/checking the work” and becoming a relationship broker.

It’s the same challenge bankers go through when they’re trying to move beyond the VP level .

Equity Research Associate Hours

Equity research operates based on two main “periods”:

Normal Days – These take up most of the quarter. You do normal work updating models and reports and answering questions, and you can expect to work ~12 hours per weekday, on average.
Days During Earnings Season and Industry Conferences – These might take place over 2-3 weeks per quarter, and you will work more like ~16 hours per day as you listen to companies report their earnings, ask questions, update your models, and send out new reports to clients.

Your hours will also be affected by how the Analyst runs the group and what he/she focuses on (e.g., on-the-ground research vs. modeling vs. vs. industry analysis vs. relationship-building).

Even something like the number of names you cover, such as 10 vs. 20 companies, makes a difference.

On average , you’ll have a better and more predictable lifestyle than the one offered by investment banking .

You might work an average of 55-60 hours per week , with spikes to 70-80 hours per week in earnings season.

Weekend work is rare, but it may come up when there’s a massive industry change or company announcement that forces you to reevaluate all your views and ratings.

Ironically, your hours might get worse as you advance because Analysts have to travel and do more work outside the office while still overseeing published reports.

Why Would You Want to Be an ER Associate?

In a previous article on equity research recruiting , we mentioned that equity research is in decline.

Headcount reductions and MiFID II – which requires banks to charge directly for research rather than “bundling it” with other products – will continue to hurt the industry.

Plus, the clients that research teams serve, such as asset managers and hedge funds, have been doing poorly because of declining fees, the rise of passive investing, and massive manipulation of the financial markets by central banks.

So, why would you want to pursue an entry-level Associate role in this industry?

Here are some of the top reasons:

Interesting Work and Solid Pay – The pay is a discount to investment banking salaries , but you’ll still make well into the six figures. And the work is arguably more interesting, with more creativity, less grunt work (e.g., pitch books , briefing books, buyer status logs, etc.), and reduced hours.
It’s Possible to Break in as a Non-Traditional Candidate – The ER recruiting process is more random and unstructured than the one in IB, and it’s sometimes more feasible to break in as a career changer or “industry expert.”
Exit Opportunities – You’ll build a solid network of institutional investors and company executives, and you can leverage these connections to move into other roles, such as hedge funds, asset management, and corporate finance at companies.
Long-Term Career Potential – While equity research careers have become less appealing, top ER Analysts can still earn into the high six figures and beyond.

You can also use the role to switch to other divisions within a bank, such as investment banking industry groups , equity capital markets , or potentially even sales & trading (if you switch early enough).

Equity Research Associate Salary (and Bonus)

Total compensation for Associates in major financial centers is in the “low six figures” – we’ll say between $125K and $200K, with the majority from the base salary.

Yes, this is lower than investment banking pay, but you also work fewer hours and have a less stressful life.

We cover the full salary + bonus progression in this equity research careers article , but as you move up to the VP, Director, and MD levels within the “Analyst” title, you’ll progress to the mid-six-figures and might eventually earn $1 million in a good year.

A Day in the Life: What Does an Equity Research Associate Do?

During earnings season, days are frantic and not that interesting since they’ll all look something like this:

7 AM: Arrive at the office early and join your first earnings call of the day. Ask a few questions about the company’s EPS and operating margin misses, and start updating your model and preparing a 2-page update note for clients.

8 AM: Your Analyst is busy fielding questions about this company’s earnings miss, so he refers a few clients to you. You answer their questions and sheepishly explain why you had a “Buy” rating on the company, even though its stock price just fell by 10%.

9 AM: The next earnings call begins. You still haven’t finished updating the model and report for the first company, so you’ll have to return to that later in the day.

[Repeat the tasks above until 11 PM or midnight.]

Rinse, wash, and repeat this all day as you join these calls, make updates, and answer questions from panicked investors.

You’ll often stay late because you won’t have time to update all the models and reports during the day.

It’s more interesting to look at a “normal day” where there are no earnings calls or panicked investors calling to ask about earnings misses.

Here’s what that might look like in a biotech equity research group :

8 AM – 9 AM: Arrive at the office and check the news for anything involving your coverage universe.

You also read a few emails from traders and salespeople and send off a quick note to them about a regulatory development that might affect one of your companies.

9 AM – 11 AM: Start working on an Initiating Coverage Report for a new biotech company that your Analyst wants to add to the group’s coverage universe.

This will be a 100-page report with tons of industry data, and it will take months to complete. You get started by reading the company’s filings and setting up the revenue and expense categories in your model.

11 AM – 12 PM: Your Analyst is busy with several clients, so she refers a few hedge fund portfolio managers to you instead.

They’re looking for extra insights into one company’s pricing power based on a meeting the management team just held.

They didn’t say anything concrete, so you give your opinion while also downplaying your certainty.

12 PM – 2 PM: Review some valuation work submitted by the equity research intern in your group and a more junior Associate who joined last year.

Their Excel formatting is terrible, but their projections and data sourcing are fairly good.

2 PM – 3 PM: Your Analyst is now on the road, and she calls to ask if you can set up meetings between a few hedge fund clients and 3-4 biotech firms of interest. You start placing the calls and sending emails.

3 PM – 5 PM: One of the companies in your coverage universe has just announced a divestiture of one of its pipeline drugs, which is currently in Phase 3 clinical trials.

This news comes out of nowhere, so you scramble to update your projection model to reflect the inflow of cash and loss of potential future cash flow from this drug.

You also call the Junior Associate and Intern over to help check the numbers.

5 PM – 7 PM: You finish the update and send it out to clients, immediately receiving questions about the selling price and its impact on the company’s valuation.

One hedge fund manager is very persistent and wants to speak with you ASAP, so you indulge him.

You explain your view that the deal is a good one because the drug was unlikely to pass Phase 3 trials anyway, and even if it did, the selling price exceeds its intrinsic value.

7 PM – 8 PM: You finally get back to that Initiating Coverage Report from this morning and start dividing up tasks for the Junior Associate and Intern.

As you’re heading home, your Analyst calls to thank you for your work in the urgent report update and to ask if you can attend the firm’s Bio/Pharma industry conference in a few weeks.

This is a ~12-hour day with a moderate amount of stress.

An unexpected acquisition or divestiture can create an emergency, but it’s usually less severe than a last-minute pitch book in IB.

And most of the day was spent working on a long-term project, answering questions, and reviewing your team’s work.

Since equity research is less hierarchical than IB, office politics within the group is sometimes less of a factor.

How to Break into Equity Research as an Associate

We cover the full process in the equity research recruiting article , but the good news is that you don’t necessarily need to have a 3.9 GPA at Harvard and three previous finance internships to get in.

Equity research recruiting is unstructured and based on the group’s current needs, which means you can network your way in if you’re persistent enough.

Also, ER teams are open to recruiting candidates from more varied backgrounds, including experts in industries where deep technical knowledge is required (biotech, pharmaceuticals, semiconductors, space/satellites, etc.).

The bad news is that you’ll have to do much of the legwork yourself because many groups lack structured processes.

No matter your background, you’ll need 2-3 very solid stock pitches for your industry to have a good shot at winning interviews and being taken seriously.

And you’ll need to know the usual technical topics about accounting, valuation/DCF analysis, and a bit about merger models and LBO models (transactions still come up – see the “Day in the Life” account above!).

MBA programs are not super-helpful for winning equity research roles because many banks do not recruit “classes” of Associates on-campus as they do for investment banking.

The CFA can be helpful in some cases, but it still matters less than university reputation, grades, work experience, networking, technical preparation, and stock pitches.

The ER Associate Job: Right for You?

To break into equity research, you don’t need to spend a fortune on a top MBA, start recruiting in your first year of university, or do all the other crazy things required for investment banking .

So, the real question is, “Should you put in a solid-but-not-overwhelming effort to aim for this role?”

My answer goes back to the “Why Would You Want to Be an ER Associate?” section above.

If you’re a non-traditional candidate , you started recruiting late, or you had some other problem, and you’re interested in the public markets and the potential exit opportunities from equity research, it could make a lot of sense.

But if you have your heart set on private equity or corporate development or something else that is difficult to break into from ER, it does not make much sense.

I don’t think equity research as a long-term career is a great option anymore because of industry and regulatory changes and declining headcounts and budgets.

But if you’re looking for an alternative to the traditional IB or S&T route that is more accepting of candidates “off the beaten path,” then the Equity Research Associate role might be right for you.

It may not be the career you deserve, but it might be the career you need.

You might be interested in Biotech Equity Research: The Best Escape Plan from Medicine or Academia? or What’s in an Equity Research Report ?

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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4 thoughts on “ The Equity Research Associate: Remnant of a Dying Industry, or the Hero That Gotham Deserves? ”

Can I break in at 62 years old? Bloomberg exp only. No grad school exp yet.

Highly unlikely, sorry. ER recruiting is a bit random / unstructured, but they’re not going to recruit someone with 30+ years of work experience in other industries. I won’t say “never” or “impossible” because there may be some exceptions out there, but I haven’t personally seen anyone enter the industry at that age.

I am currently a client facing Portfolio Associate in Private Wealth Management team at a bulge bracket bank managing $1bio AUM for UHNW clients and have received an offer for an Equity Research Associate – Large Cap Banks position.

I have previous experience in corp finance dept of a bulge bracket bank hence the ER offer.

I am confused if I should take it up. Unsure of the pros and cons – if you could help me out. I want to understand which one would be a better choice – i am currently 31 yrs old.

Well, what is your long-term goal? Hard to answer this question without more information.

If you want to invest in individual companies and other publicly traded securities (e.g., eventually move to a hedge fund), the ER offer is better. Yes, ER is a declining industry, but hedge funds and asset management firms still recruit out of the ER pool.

The hours will be worse than PWM and the stress levels will be higher, but the pay ceiling is likely higher, and it is definitely higher if you move to a HF.

If you have no interest in investing in individual securities and are happy with your current compensation and lifestyle and the pay ceiling in PWM, then you should stay where you are.

The Surprising Benefits of Work/Life Support

Alexandra Kalev
Frank Dobbin

To succeed, almost every employee needs work/life support at some point. Women and people of color need it the most, research shows, because they face greater challenges and have fewer resources available to them. They are also the least likely to receive it, however, and as a result often are forced to change or leave jobs and lose out on opportunities for advancement.

Given that situation, the authors decided to examine what effects various corporate work/life programs had on the management workforce. Analyzing data from more than 800 U.S. companies over 30 years, they found that when companies offered flexible work schedules, family leave, and childcare support to all employees, the percentage of women and people of color in management rose significantly. In fact, those work/life benefits had a larger impact than the most popular racial-equity programs did.

Companies have long known that programs promoting work/life balance boost productivity, reduce turnover, and improve employees’ mental and physical health. And now it’s clear that they are also a powerful way to increase organizational diversity.

It’s a secret weapon for achieving organizational diversity.

Idea in Brief

The problem.

To succeed, at some point almost every worker needs work/life support, and the data suggests that women and people of color need it most. But they don’t receive it—or even learn about company benefits—nearly as often as they should.

The Context

For many companies, the ideal worker remains somebody unencumbered by family obligations, who can adhere to the kind of demanding daily schedules and career trajectories that were standard for white men in the 1950s and have intensified since.

The Way Forward

Companies need to spell out and uniformly offer policies in three areas: flexibility, time off, and childcare. Doing so, studies show, helps workers and managers alike by lowering stress, improving productivity, boosting retention, and increasing diversity.

Corporate programs that support work/life balance promote productivity, reduce turnover, and improve employees’ mental and physical health. That much is well-known. But our research has revealed another benefit: They can also boost your organization’s diversity. In fact, when it comes to increasing diversity among managers, they’re better than the most popular racial-equity programs.

Alexandra Kalev is an associate professor and the chair of the Department of Sociology and Anthropology at Tel Aviv University. She is a coauthor of Getting to Diversity: What Works and What Doesn’t (Belknap Press, 2022).
Frank Dobbin is the chair of the Department of Sociology at Harvard University and Henry Ford II Professor of the Social Sciences. He is a coauthor of Getting to Diversity: What Works and What Doesn’t (Belknap Press, 2022).

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An Ultimate Guide to Equity Research

This post was originally published on August 15, 2019 and was updated for relevance on July 29, 2024.

Equity research is a specialized field within the finance industry that analyzes public companies, industries, and the overall economy. It helps investors make informed decisions about buying, holding, or selling investments.

In this guide, we’ll explore equity research, its definition, how to conduct research analysis, what goes into a research report, the various roles involved, key considerations when selecting an equity research firm, career pathways into the equity research industry, and more.

With that, let’s get started.

What is equity research?

Before we discuss equity research, it’s important to understand the concept of equity. Equity is the full ownership of an asset once its associated debts have been settled. Equity research, or “securities research,” refers to the process investment banks use to understand a company's overall equity or value.

Equity analysts, often working within an investment bank, lead this process. They create documents that delineate the equity in question within the context of the business, its management, the broader industry, and the economic landscape.

The larger the investment bank, the more reports an equity research team will tend to produce, and the analysis included will be more detailed. Examples of analysis include:

Review of how the macroeconomic picture is likely to affect the company
Operational changes or investments that are likely to affect the company’s performance
Review the company’s financial statements and explanation of changes
Projections on the status of the company’s revenue (and share price) and where it’s headed
Recommendations on whether to buy, hold, or sell the company’s equity

How to conduct equity research analysis

Research is the name of the game. An Equity Research Analyst is responsible for providing vetted and trusted insights to make sound and informed investment decisions. This process is typically broken into four stages:

1. Thorough Research

Equity Research Analysts focus on specific regions and sectors. They leave no stone unturned in conducting extensive research, thoroughly reviewing financial reports, balance sheets in Excel, earnings releases, industry trends, regulatory changes, macroeconomic factors, and more that could impact the companies they are analyzing.

2. Financial Modelling & Valuation

Financial modeling involves creating mathematical representations of a company's financial performance by forecasting future results based on historical data and assumptions. Valuation is used to determine the fair value of a company's stock using methods such as discounted cash flow analysis and comparable company analysis. These tools help evaluate a company's financial health and growth potential to advise on investments.

3. Creating Equity Research Reports

Equity Research Analysts are responsible for condensing their findings into easily understandable reports for investors. We'll expand on this more in the next section.

4. Communication Skills & Publication

Equity Research Analysts in senior or lead positions often present their findings to their organization or client base. These individuals must be able to simplify complex financial data, so strong communication and presentation skills are essential.

What is an equity research report?

Buy-side or sell-side, an equity research report typically includes the following:

An industry research overview that covers trends and news related to competing companies.
A company overview that includes any recent business developments and quarterly performance results.
The equity analyst provides an investment thesis explaining the reasons behind their prediction of the stock's performance. This section also includes the target share price, which many consider the most critical aspect of the report.
A financial model-based forecast of the company's income, cash flow, and valuation.
Risks associated with the stock.

Difference between a career in equity research and investment banking

Investment banking and equity research are similar but have clear distinctions in their intended outcome. Investment banking is all about helping companies raise money through stocks and bonds, offering mergers and acquisitions services, and managing significant financial deals.

Equity research involves evaluating individual stocks and providing investment advice based on their potential value and performance.

In essence, investment banking focuses on managing financial transactions, while equity research focuses on analyzing and valuing individual stocks.

When considering a career between the two, it's imperative to evaluate the following factors:

1. Educational Background

Both career paths require a bachelor's degree in economics, accounting, finance, or engineering. For career growth, a Chartered Financial Analyst (CFA) designation is often required for Equity Research Analysts, while investment banking can require a Master of Business Administration (MBA). Additionally, investment bankers must pass the Series 79 exam , which measures the knowledge needed to perform the critical functions of an investment banking representative.

2. Career Path

In investment banking, the career path is straightforward. It starts with being an analyst, then an associate, and climbing to higher positions. In equity research, the career path could be more transparent. Typically, it involves transitioning from associate to analyst, senior analyst, and then to the role of vice president or director of research. Investment bankers have better opportunities to reach top positions because of their involvement in making deals and managing clients. They often go on to work for private equity firms for venture capitalists. Research analysts are frequently seen solely as number crunchers and not thought of as being able to drive substantial business growth.

3. Skill Set

It should come as no surprise that Equity Research Analysts require strong analytical and mathematical skills to handle complex calculations, build predictive models, and prepare financial statements. They must also be proficient communicators capable of simplifying complex financial data. As for investment bankers, financial modeling and industry analysis are crucial early in their careers. However, as they advance, they transition to a sales-oriented mindset, excelling at closing deals and managing client relationships.

4. Work-Life Balance

Equity research is known for long hours, particularly during earnings season, but there are periods of relative calm. Investment banking is another beast, typically requiring brutal hours, often up to 100 hours per week. A recent article in Forbes highlighted that work-life balance has become a significant concern in investment banking. This is particularly after the reported deaths of two Bank of America employees who were said to be working up to 110 hours per week.

5. Recognition

Equity research reports offer visibility to associates and junior analysts. Senior analysts are sought after by the media for comments on the companies they cover. Junior investment bankers work in obscurity but gain visibility as they progress in their careers. Visibility for investment bankers significantly increases when they work on large, prestigious deals.

6. Compensation

Investment banking generally offers higher earning potential compared to equity research. For example, according to Wall Street Oasis (WSO), investment banking associates earn between $150,000 and $200,000 with substantial bonuses, while senior vice presidents or managing directors earn over $400,000 annually. WSO also says entry-level analysts start between $50,000 and $80,000 and have the potential to make up to $500,000 as they grow to leadership positions.

Roles in equity research

In the world of equity research, it is crucial to understand the distinction between a buy-side and sell-side Equity Research Analyst. Below, we'll outline their respective areas of focus and ultimate objectives.

1. Sell-side analysts

Sell-side Equity Research Analysts work for investment banks and provide their clients with sell-side research and recommendations on stocks and other financial instruments. Their primary goal is to generate trading commissions and investment banking business for their firm.

2. Buy-side analysts

A buy-side Equity Research Analyst works for institutions that buy and sell securities, such as mutual funds, hedge funds, and pension funds. Their role involves researching and making investment recommendations for their firm's portfolios.

Best Equity Research Firms

Below are some of the top-ranking equity search firms.

JP Morgan —J.P. Morgan’s Research team uses state-of-the-art technologies and innovative tools to provide clients with top-notch analysis and investment advice.
Barclays —The equity research teams cover hundreds of stocks across the Americas and Europe, delivering event analysis, stock ideas, and sector themes. They collaborate with other teams to offer clients unique, cross-asset perspectives on industries and markets.
Credit Suisse AG —The team has original research on over 3,000 companies with thought-provoking thematic analysis, differentiated trading ideas, and coordinated global views.
Bank of America Financial Center —The company offers comprehensive research and analysis for both institutional and retail clients. It encompasses over 4,000 companies across 35 global sectors in developed and emerging markets. Its research involves fundamental and technical analysis as well as hedging strategies.
Morgan Stanley —Through timely, in-depth analysis of companies, industries, markets, and world economies, Morgan Stanley has earned its reputation as a leader in investment research.

Things to consider when hiring an equity research firm

When evaluating an equity research firm, it’s essential to consider the experience and reputation of its analysts, the firm’s track record of accurate stock picks and recommendations, the depth and quality of their research reports, the firm's access to company management and industry experts, their industry specialization, the firm's coverage universe, the timeliness of their research, and the overall transparency and integrity of their research process.

How to get into equity research

If you are considering entering the equity research space, you will likely need a finance, accounting, or economics background. Many professionals in this field begin with a bachelor's degree in finance or a related field. Those seeking career advancement often pursue a master's degree or a CFA designation to enhance their resume.

Research assistant, junior analyst, or equity research associate are common entry-level roles. Advancing in your career will require gaining experience in financial analysis, modeling, and report writing. Developing a solid network of connections within the industry is also crucial for discovering new opportunities in equity research. Like all areas of business, networking is critical.

Staying up to date on the latest trends and news within the equity research space is important for understanding the workings of the stock market and developing strong analytical and critical thinking skills. This is crucial for ensuring high-quality, long-lasting success in equity research.

The Importance of Equity Research

As we've discussed, equity research is essential for investors as it provides valuable information and investment recommendations. It involves digging into company finances, creating financial models, and meeting with industry experts.

Equity research supports investment decisions, evaluates securities, and guides investors and fund managers. For example, it helps predict the future growth potential of tech companies, find investment opportunities in the pharmaceutical industry, and understand how macroeconomic trends affect different sectors and stocks.

Final Thoughts

Equity research is crucial in empowering investors to make informed investment decisions. Through comprehensive analysis of financial data, market trends, and company performance, equity research provides valuable insights that enable investors to identify attractive opportunities and manage their portfolios effectively. By leveraging the expertise of research analysts and utilizing robust analytical techniques, investors can gain a deeper understanding of the risks and potential returns associated with specific investment opportunities. Ultimately, equity research is a fundamental tool for institutional and retail investors, helping them navigate the complexities of the financial markets with confidence and clarity.

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Equity research overview.

If you're interested in breaking into finance, check out our Private Equity Course and Investment Banking Course , which help thousands of candidates land top jobs every year.

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.