I’ve noticed some recent debate about the desirability of equity research. I am a former equity research associate who is now a full coverage analyst, managing my own sector coverage and a team of associates. I usually do a Q&A around this time of year, and I figure now is a good time to do one again. Ask away.
Trending Content - Equity Research Forum
Career Resources
To kick things off, I do want to address some recent comments / concerns in other threads
1) The pay gap at the junior level relative to investment banking does seem to be increasing. To be frank, it was always there, but increases in base and bonus pay for bankers has outpaced those for research (and sales and trading) recently. This has been somewhat offset at the senior level as this most recent two years have been good for publishing analysts.
2) Exit options remain very strong for equity research. I have seen hedge funds, mutual funds, and most prominently, an increase in IR / treasury / strategy roles. Many of these corporate roles are seeing higher pay than in previous years as the war for talent increases. It is true that many people who spend years in research and who go to hedge funds don’t end up much better off - which is why I encourage those that want hedge funds to go that route quickly. Experience does you better opportunities at the biggest long only funds, and at corporates.
3) The job isn’t “lonely.” If it is lonely for associates, the manager is doing a piss poor job. I give my associates tasks including: calling companies for model clarifications, responding to simple client requests, collaborating data requests with sales and trading, taking with other teams when doing collaborative research. I encourage my associates to travel when it makes sense as well. The equity research job, both at the associate and analyst level, is a job about communicating with a wide variety of internal and external counterparties, which is frankly the best part of the job.
4) Upward may be increasing after stagnating for years. Due to a number of high profile departures of very tenured analysts to companies, mutual funds, and other positions, I have seen more young, “new” coverage analysts emerge recently across a number of firms. This is a great trend in an industry where internal promotion is historically difficult.
1) I see analysts and firms trying to get away from the traditional research report and leveraging multimedia, podcasts, etc more (who knows if this actually works or not). Sentiment around ER will remain the same - there are always clients that need help getting up to speed on a name, getting access to corporates, news flow, and such.
2) Without getting too specific, Evercore continues to do well, and Truist/RayJay seem to be growing.
3) The best analysts actively mentor team members (by accentuating their strengths, helping them to improve weaknesses) and give them ownership of things that they can handle, increasing responsibility as they mature
Stop trying to make ER podcasts happen.
Sincerely,
Buyside.