Careers in Equity Research

In today’s world Equity Research is considered a very lucrative career option within the expansive field of Finance and financial services. By popular definition equity research is the study of stocks based on their fundamental parameters and it aims at analysing the companies. This is done more to find possible investment opportunities.

Entry
Professionals enter equity research as analysts at a junior or senior level depending on the level of work experience and expertise. They are commonly referred to as “analysts” or “research analysts”. Research analysts are further segregated into equity analysts and fixed income analysts. Research analysts study stocks and issuers where as fixed income analysts research bond issuers. Apart from the earlier mentioned distinction in the nature of the research, there are analysts who cover all securities of a specific issuer, stocks, bonds etc.

Role
Research especially in the equity market plays a very vital role by providing information to the market. Lack of information can create inefficiencies, which can result in stocks being over or under valued. Analysts use their expertise and spend a lot of time analyzing a stock, its industry and peer group to provide earnings and valuation estimates. Such research services are provided by brokerage firms, independent consultants etc. An equity research analyst also has options of working as accounting analysts, in data management, or working for a software company. As mentioned earlier analysts can belong either to the buy side or the sell side. While employed on the buy side professionals work for institutional investors that can range from hedge funds to insurance companies. On the sell side individuals deal with brokers and dealers and trading customers. Analysts who involve in research work with independent equity research firms in turn provide service to the buy and sell side firms. It is important to note that it is indeed an analyst’s job to help the clients or investors to decide whether individuals should buy, sell or hold stock. Within the organisation it is a senior analyst who publishes the research findings.

To start a career in this field you would need the right credentials either in the form of good professional experience or else a good finance, business or statistical degree from a reputed academic institute. Having an MBA with a major in Finance is considered an added advantage to enter this field however traditionally research has always considered operational experience more important.

B-schools
B-schools be it Indian or international have a small percentage of its graduates opting for various roles within equity research each year. On the international scene a popular perception is that attending business schools in financial hubs like New York, London, Chicago, and Boston etc is better because of the business networks and field opportunities existing in these cities. Some of the international B-schools that are sort after for equity research in terms of placements include, Columbia business school, University of Pennsylvania, Harvard business school, University of Chicago, Wharton business school etc (not in any order).

Challenges
The work life in this field can be hectic and challenging. The most important skill for an equity research analyst is data manipulation and management. Attention to detail, discipline, and focus are all essential for anyone who wants to become an equity research analyst.

Since this job involves a lot of communication especially to attract buys or sale, having good interpersonal skills becomes important. The other important attributes include good analytical skills and passion for the work. Professionals in equity research work on information all the time so one is expected to keep abreast with all kinds of financial and industrial publications. A few of the publications that could help in this case include The Wall Street Journal, The economic times, Mint etc.