Equity Research Career: Our economy or world economy is mainly affected by movements in the prices of Equity, almost all the country has their stock markets where the shareholders buy and sell equity to earn profits either in the form of trading profit or in the form of dividends.
By equity research we mean analyzing and studying in details about the equity of companies so that we can inform the investors as to which shares they can buy or sell, so that we can inform the traders whether to stay invested in the Equity or to Exit and can give advice to the bankers or other financial institutions to understand the Equity of a particular company in details.
Equity Research Career
It is never possible for any organization or individual to study in details about all the companies in which they want to get their money invested and is always dependent on their research team to guide them where to invest and for how much time.
There comes the role of an Equity research person that are required by Stock Brokers, Mutual Funds Companies, Private Equity Firms, Venture Capital Firms, Banks, KPOs, Credit Rating Firms, Media Companies, Data Firms.
For some or the other reason they need the help and guidance of equity research personnel to do their business.
In equity research report the following information is generally available
- Company Research and Modeling
- Comparable Company Analysis
- Dynamic Financial Modeling & Valuation Analysis
- Quantitative and Qualitative Analysis
- Analyzing News and Events
- Segment Analysis
- Sector and Thematic Research
Process of Equity Research
- Financial Statement Analysis – The financial statements are to be thoroughly studied and evaluated, working on all the ratios to understand the financial soundness of the company and its prospects, based on future projections.
- Company research & analysis – Understanding the working of companies, the way the decision are taken and the cause and effect of the decision on the workings of the company and whether they are going to give benefit to the investors shortly or not.
- Industry Analysis – Research on the Industry like cost-benefit analysis in comparison to competitors in the same industry. Future prospect and expected growth of the Industry along with Government support and market factors are to be reviewed.
- Economic Analysis – Along with Industry one needs to research on macro level i.e. economic analysis to determine the availability of infrastructure facilities like ports, roads, electricity, etc. with the help of which the industry can flourish.
Qualification required to make a career in Equity Research
A post graduate degree would be sufficient to make a career in equity research if you are starting of your own but having specialized knowledge and skill through professional degrees will be an added advantage.
Companies look for persons having Chartered Accountant (C.A), Chartered Financial Analyst (CFA), Master in Business Administration (MBA in Finance) degree, so it's better to grab one before trying to make a career out of it.
Apart from the professional degree, there are some skill sets required like you should be having a good analytical skill and a strong grip on the fundamentals of finance since in equity research most of the reporting is given through numbers. You should also have good communication writing and presentation skill since you need to explain your research to the investors and traders and other users.
If you want to work as an Equity research analyst for Selling products on behalf of any broking firm also called as sell-side equity research analyst in the US you are supposed to pass the Research Analyst examination administered by FINRA (Financial Industry Regulatory Authority) for further details on various examinations and schedules you can log in to www.finra.org
Earnings in Equity Research career
In respect to earnings be rest assured that more your judgments are accurate higher will be your ratings, apart from professional degrees if your work is up to the mark you can expect a minimum of Rs.4 lakh per annum to a high of Rs.20 lakh per annum and from US point of view you can fetch around 80,000 USD plus bonus and incentives per year. Further, since you are doing equity research, you can earn by investing your funds where there is no limit for your earnings.
Yesterday, I got a call from Mr.Suresh Vora from Ahmedabad (name and city changed). Suresh wanted my help in designing his equity research career path.
Equity Research Career Conversation
Here’s what we discussed: Why Equity Research
Suresh: “ Hello Sir, I’m Suresh from Ahmedabad. I completed MBA in 2007 and since then I’m working as a faculty in an MBA institute here.”
I: “ That’s great, Suresh.”
Suresh: “ Thanks, but now I want to work in companies.”
I: “ Good. Have you started looking out? What’s the market saying?”
S: “ Well, I applied to three major companies in research and analysis domain, but couldn’t make it.”
I: “ Why? What’s the problem exactly?”
S: “ I cleared all rounds in selection process, except one,where they asked me to do ratio analysis and analyze financial statements using Excel.”
I: “ Yes, majority companies in financial analysis and research conduct this round to check actual skills of candidates.”
S: “ Sir, I have conceptual knowledge of various subjects in finance and I use the same to teach in my institute. I have 5 years teaching experience, so, the companies are not ready to take me as a fresher and since I don’t have practical skills required for the job, they can’t offer me the position of a Team Leader. What should I do now?”
I: “ Suresh, I think, you should first invest your time and energy in learning practical skills required for your job. If you’re really committed to work in companies in Equity Research area, you need to learn skills like – financial analysis, financial modeling, Excel, DCF and relative valuation, stock picking techniques and report writing. If you know the concepts well, it will take only a few months’ time to master these skills.”
S: “ When should I start learning these skills?”
I: “ Start immediately and practice well. Remember, employers look for skills. They want to know whether you can ‘deliver’. So, focus on doing the things on your own, rather than knowing many things at a time.”
S: “ Thank you sir.”
I: “ My pleasure and wish you all the best, Suresh.”
The above conversation is real. I get many such calls regularly asking for Careers/Jobs in Equity Research
As mentioned earlier there are various companies who can hire you, and you can be either Assistant Fund Manager or Fund Manager from Buy-side or sell-side research analyst, either you can be an investment banker or a private equity fund manager, head of the research team.
So there is a good scope. But one thing is for sure that you need to work hard since there are end number of Industry and companies, so you need to focus on few industries and within it few companies to master yourself in this field. If you want to get into Equity Research career, start early. Start reading
If you want to get into Equity Research career, start early. Start reading books on Investments. Read Annual Reports of companies and keep your eyes and ears open.
Do You want to get into Equity Research? What problems are you facing?
Write your equity research career queries in ‘Comments’ section below.