Equity Research vs Investment Banking

Equity research analyzes stocks for investors, while investment banking offers financial services to companies, like fundraising and mergers

Patrick Curtis

Reviewed by

Patrick Curtis

Expertise: Private Equity | Investment Banking


August 24, 2023

Equity Research or Investment Banking?

With so many positions and terminology in the finance industry, it is not uncommon that you may be confused about the differences between different sectors. One of the most commonly asked questions is the difference between equity research and investment banking.

Most people think investment banking is superior - since everyone who wants to break into the finance world says they want to be an investment banker. However, lengthy hours and a demanding workplace for investment banking have diminished apparel to people.

Nevertheless, the industry still draws in a lot of workers. Top graduates are now choosing professions in management consulting, technology, or founding their firms rather than flooding into investment banking.

One position in particular that is gaining more popularity is equity research. People didn’t usually consider equity research before because they didn’t think it was as glamorous and prestigious as investment banking.

Nowadays, with more access to information, people realize that equity research isn’t what most people expect it to be. 

In addition, knowing whether investment banking or equity research is a better fit for you when considering a career in the capital markets is crucial. 

Both equity research and investment banking provide a great working environment and lucrative pay. However, personality dominates all other factors while making a decision. 

Key Takeaways

  • Equity research is a research division in an investment bank or advisory firm that gathers data to provide recommendations to clients on particular stocks and look at a company’s financial statements.
  • Investment banking assists clients in navigating the capital markets and works on underwriting (capital raising, IPOs, etc.), mergers and acquisitions, corporate finance, and general advising mandates to assist their customers in generating funds.
  • An investment banker's day-to-day activities can vary depending on the exact function and stage of a deal or project.
  • Equity research is different from investment banking in its fundamental job functions, required skill sets, work-life balance, and work for different departments and with different people.
  • An equities research analyst's daily tasks can change based on the company's size, depending on their level of expertise, their level in the company, and the particular sector or industry they focus on.

What is equity research?

Equity research analyzes financial data and openly available information to assess the performance and potential of particular stocks or the overall stock market.

Equity research analysts will look at a company’s financial statements, industry trends, market data, and other factors and statistics to determine the value of different stocks.

Equity research analysts then use this data to offer their firm’s clients (institutional investors, hedge funds, individual investors, and more) general market or industry perspectives and buy, hold, or sell recommendations on particular stocks. 


Studies conducted by equities research experts can significantly affect the stock prices of the studied firms and aid investors in making wise judgments.

An equities research analyst's daily tasks can change based on the company's size, depending on their level of expertise, their level in the company, and the particular sector or industry they focus on. Though the general activities include:

1. Collecting and analyzing financial data

To stay current on the firm's equity research analysts' financial performance, you must constantly study corporate financial statements, market data, and other pertinent information.

2. Meeting with the company management

Equity research analysts frequently meet with the management teams to better understand the business operations, financial performance, and long-term goals of the companies they cover.

3. Talking to industry experts

On top of meeting with company management, equity research analysts also speak with other industry specialists, including rivals, suppliers, and customers, to develop a more thorough grasp of the businesses and industries they cover.

4. Writing research reports

Equity research analysts prepare reports based on their research to communicate their findings and investment suggestions with clients. Hence, you need to be good at communicating via writing, in person, etc.

5. Presenting research to clients

To clarify their investment thesis and respond to inquiries, equity research analysts deliver their findings to clients in person, over the phone, or in other ways.

6. Staying informed of market and industry trends

Equity research analysts must stay up to date on general market and industry trends to ensure that their analysis and suggestions are still relevant.

These activities show that equity research analysts must be highly analytical, detail-oriented, and effective communicators. You need to be able to analyze intricate financial data, think critically, and provide appropriate investment advice.

The typical annual salary for equity research analysts is between $70,000 to $150,000. While senior analysts with more years of experience can earn salaries toward the higher end, junior analysts may start at the lower end of this spectrum.


The annual salary is specific to equity research analysts in the United States. However, the States should be in the highest paying position since the States have the most developed financial market.

What is investment banking?

Investment banking is a financial business that involves advising corporations, governments, and other entities and generating funds.

Investment bankers assist clients in navigating the capital markets and finding ways to raise funds by issuing securities such as stocks and bonds.

Investment bankers work on underwriting (capital raising, IPOs, etc.), mergers and acquisitions, corporate finance, and general advising mandates to assist their customers in generating funds.

An investment banker's day-to-day activities can vary depending on the exact function and stage of a deal or project. However, here is a rough outline of a normal day for an investment banking analyst:

  1. Reviewing financial data and market trends.
    Investment bankers begin each day by examining financial data and market trends to stay current on changes that may affect their clients and deals.
  2. Meeting with clients
    Meetings with clients to negotiate possible transactions, offer updates on current projects, or answer queries.
  3. Conducting financial analysis
    Investment bankers devote much effort to financial analysis, including developing financial models, generating presentations, and compiling client reports.
  4. Participating in team meetings
    Investment bankers frequently participate in team meetings to coordinate their work, communicate information, and talk about the status of the projects.
  5. Attending client presentations
    To deliver their conclusions and suggestions, investment bankers also attend client presentations.
  6. Collaborating with other departments
    Investment bankers may work with other departments, such as legal or risk management, to ensure that deals are planned and carried out appropriately.
  7. Staying up to date on regulatory changes
    Investment bankers must be aware of and updated about regulatory developments and how they might affect their customers and business deals.

From the above, you find that investment bankers must be able to analyze complex financial information, effectively communicate their findings and recommendations to clients and colleagues, work long hours, and collaborate effectively with colleagues and clients.

Depending on the location and the investment bank, recent graduates starting as investment banking analysts can anticipate salaries ranging from $70,000 to $100,000 annually.


An investment banking analyst can expect to earn anywhere from $100,000 to $150,000 per year (after a few years into the job) and even more if they can be in senior executive positions.

Equity Research vs. Investment Banking

Now that you know what equity research and investment banking are, let’s examine the differences.

Here are some of the key differences between equity research and investment banking:

Equity Research Vs Investment Banking
AspectEquity ResearchInvestment Banking
Job FunctionAnalyzing companies, industries, and markets to provide investment recommendations. Focusing on buying and selling stocks for clients.Providing advisory services and facilitating financial transactions. Focusing on structuring, negotiation, and execution of financial deals.
Skill SetsFinancial analysis, modeling, accounting, valuations, and writing skills for reports.Financial modeling, deal structuring, negotiation, relationship building.
Function FocusInternal functions, research, and analysis.External functions, deal execution, and financial advisory.
Work-life Balance12-hour days with intervals of relative tranquility. Busiest during initiating coverage and earnings season.80 to 100-hour workweeks with occasional variations. Can be intense throughout.
Department/InteractionWork in research departments within brokerage firms or investment banks. Interact with company management and industry experts.Work at investment banks or advisory firms. Interact with clients, executives, lawyers, accountants, etc. Grouped by industry specialties.

To sum up, equity research and investment banking are essential financial jobs. They have different tasks, skills needed, and work settings.

Work hours in the finance industry are always brutal regardless of the specific position, especially for those in more junior-level positions.

While equity research is more research and advice, investment banking is more hands-on in helping clients. Also, equity research analysts work on the firm's internal functions. In contrast, investment bankers work on the external functions of a firm.

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Researched and authored by Alisa Zhu | LinkedIn

Reviewed and edited by Parul Gupta | LinkedIn

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