What Does an Equity Research Associate Do?
Equity research is one of the most challenging jobs in the financial industry. This type of work requires a minimal education but multiple skills. It is a fast-paced environment, and the compensation is very good. The profile requires a strong work ethic and the ability to prioritize projects. As an equity research associate, you will work alongside senior analysts to provide strategic insight into companies.
Investment banking
Investment banking is an industry that provides financial services to companies, including equity research. Equity research associates are responsible for conducting fundamental analysis of companies, creating valuation models, and writing reports. They are also responsible for preparing information memorandums and pitch books for companies. These roles have a variety of responsibilities and differ in hours and pay.
Investment banking associates typically make between $150,000 and $200,000 a year, plus up to a 50% bonus. Senior executives may earn more than $400,000 a year. Equity research analysts typically earn $83,996 annually. This salary is based on the amount of time and education required for the position.
Private equity
The pay structure of a private equity research associate consists of two components: base salary and bonus. The base salary is covered by management and deal fees, while the bonus comes from the investment return. The latter includes carried interests and co-investments. Some firms also allow associates to invest their own money in their projects, which means that they stand to gain benefits if the project does well.
The average Private equity research associate salary varies by location, but in general, the U.S. is the best place to work. There are more opportunities for advancement and higher salaries, but you need to be ready to work hard. A few of the top firms offer $400k+ salaries to their Associates.
Sell-side firms
If you’re considering a career in equity research, your first step is to understand how the process works. A sell-side analyst typically spends 75% of their time modeling companies and 25% talking to investors. Internships in equity research often involve working with data, industry research, and model updates. The work day can range from six to twelve hours, but it can be significantly longer during earnings season and industry conferences.
Sell-side analysts work for financial institutions and corporations, providing advice on important transactions. They also help raise capital and create liquidity for listed securities. In exchange for a fee, they write reports and financial evaluations. They also communicate with institutional investors to keep informed of industry conditions. They analyze and rank investments and present investment ideas to trade desks.
ER associates
To be able to land a job as an equity research associate, it’s important to understand the compensation and educational requirements for the job. If you’re a recent graduate, the most basic requirements for an ER position are a solid background in investment banking and knowledge of the basic technical topics. While an MBA is certainly beneficial, many banks don’t recruit on campus, so a CFA is not necessarily necessary. Technical preparation, work experience, and stock pitches will likely be more important than a CFA certification.
Entry-level employees in equity research begin their careers as associates and stay in that position for two to four years before they advance to analyst status. Thereafter, they may become VP, senior VP, or MD-level analysts. This career progression is similar to that of investment banking. An equity research associate is responsible for analyzing public companies and communicating with management teams to make Buy, Sell, and Hold recommendations to investors.
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