Equity Research Associates are responsible for compiling research reports and other information that an investor demands about bonds, stocks and mutual funds. They will do work that involves doing extensive research and quantitative analysis to build expertise in a particular industry, or specific companies.
Equity Research is a division located in a buy-side or sell-side company, with the task of creating research to serve the needs of use between customers and businesses.
The insights provided by the equity researchers will be used by investors to decide how to distribute their funds. For, Private Equity firms and investment banks, they use the report to value the company for M&A, LBO, IPO, etc.
2. Equity Research Associate Job Requirements
- The associate position is a demanding and fast-paced job that requires the ability to think quickly on one’s feet and work independently
- Strong candidates will have an intense interest in the stock market and a demonstrated record of professional, academic and personal achievement
- Outstanding interpersonal and written communication skills
- A strong competitive spirit balanced by a proven ability to work as part of a team
- Strong financial modeling experience required
- Securities Industry Essentials, Series 86 and 87 (the Research Analyst exam. These two are a must for those finance professionals who want to take charge in producing in-depth industry reports for investors) required (or willingness to obtain)
- Proficiency in data mining software
3. Equity Research Associate Job Responsibilities
An equity research associate is a cross between a corporate finance analyst and a statistician. Associates are responsible for research companies, projecting earnings, following overall market trends and producing research reports on the companies they follow. Most research associates work with a single research analyst who is an expert on a specific industrial sector, such as large software companies, major airlines or medium-sized consumer goods retailers. By working with an analyst and focusing on specific companies, associates build expertise on that particular sector.
- Work in partnership with the senior analyst to conduct extensive company and industry research
- Create and maintain financial models and valuation analyses
- Write company reports, industry reports and investment recommendations
- Meet with company management teams and interview company customers, suppliers and competitors
- Make company visits and attend trade shows and industry conferences
- Contingent upon developing industry expertise and familiarity with the coverage universe, additional responsibilities include marketing investment ideas and investment research to our institutional sales force and institutional investors
4. Why Would An Equity Research Associate Job Be Ideal?
Although the industry is facing obstacles in the number of staff cuts, as well as the rise of passive investment and manipulation of the financial markets of central banks, there are still good reasons. reasons for you to consider pursuing this industry:
A relatively high and stable salary:
Of course, when compared to the investment banking group, this job is quite different, but you will still make money at 6 digits. And the work does not require you to work stress more than 80 hours a week. Furthermore, the responsibilities you take on are of a much more interesting nature than those of investment bankers such as brochures, summary books, buyer’s status logs, etc.
Opportunities for candidates outside the industry:
The recruitment process for an equity research associate job is quite random, and is not clearly structured as it is in Investment Banking. At the same time, it’s even a plus if you’re a career change candidate, or already an expert and have solid knowledge in another industry.
As an equity research associate, you will meet and work with many executives of companies, as well as investors. It would be great if you could leverage and build relationships with these people so that you can switch to other opportunities such as hedge fund, corporate finance or asset management.
Long-term career potential:
Despite the small number of recruits, the importance of equity research associate job is undeniable and they still receive a decent salary. You can switch to positions like Sales and Trading if you do the move early.
Regular Days: This type kind of takes up almost an entire quarter. Your job will be to make reports, answer relevant questions and update tissue. Figure. At this point, you will work approximately 12 hours per day of the week.
Peak season and conference days: Events like this can take up 2-3 weeks in each quarter. You will meet with representatives of the companies and listen to their earnings reports, ask questions, clone the model, and send them a new report. It doesn’t sound like much extra work, but you should expect to work harder, around 16 hours a day per week.
In general, your working hours are also influenced by the analyst who manages you, and the things they focus on: relationship building, or researching, or modeling, etc?
But when compared to Investment Banking, your working hours are really much better. You will work an average of 55-60 hours per week, and during high season this increases to 70-80 hours per week.
Occasionally you’ll have to work weekends when there’s a mandatory notice from the company, or when a major change occurs in the industry. However, this also rarely happens.
But bear in mind is that when you advance, be sure to expect to work a lot more hard core with longer hours as you have to travel here and there a lot.
6. Equity Research Job – Hierarchy and Promotions
Analyst is usually the most senior member in team equity research, below are associates.
A team usually has 1 Analyst, who will be the leader of 2-3 equity research associates.
However, titles “analysts” or “associates” are just what people use in the report.
In fact, internally, the organizational structure of the research department is quite similar to that of investment banking. To be more specific, you will advance from Associate to VP, to Senior VP / Director, and finally to Managing Director.
And analysts may mean different levels. For example, we have VP-level Analysts vs. MD-level Analysts.
Another feature of this equity research industry is that the number of employees of the whole industry is not large, only about a few hundred when compared to the number of thousands of investment banking.
Therefore, the turnaround rate is not high and the promotion is very difficult if only working at one bank forever.
You have a good chance if your Analysts leave. However, in a more certain case, you should join another bank to get promoted.
You must understand very clearly that in order to advance in the industry, you cannot just sit back and work on Excel. Instead, you must build a foothold for yourself, build relationships with management teams and institutional investors.
One more thing, you won’t get fired if you don’t perform well enough to get promotion. However, it is possible that there will be cost-cutting seasons, and it is not excluded that the research branch will be expelled, not just yourself.
If they are on junior level, people will usually stay for 2-4 years before moving to another company or bank, or leaving this equity research industry.
7. Equity Research Associate Job Salaries
The total salary of an associate researching company shares falls within the first part of the 6-digit value range: $ 125K – $ 200K (most of which comes from the base salary).
Of course, your salary will increase when you increase your position, with the ranks: Analyst, VP, Director, Managing Director, your salary can reach $ 500K +, even reach $ 1M if you are doing good, as well as the business is.
$94K – $120K
$125K – $150K
$120K – $150K
$155K – $180K
$150K – 225K
$200K – $300K
$250K – $450K
$300K – $600K
$500K and $1 million
$250K – $600K
7am: You will be in the office very soon. Start making the first calls of the day and prepare customer reports. You may also need to modify the pricing model.
8am: Your analyst is busy responding to customers because of a loss in profit, and they’ll ask you to take care of some of them. You will find customers and be in charge of answering their questions and inquiries.
And .. That’s it all. You will repeat the same thing throughout the day to 11pm, even midnight.
Work will be easier and more enjoyable on a normal day, not peak:
You will arrive at work around 8:00 in the morning, and keep up with market news related to the industry for which you are responsible.
At this point, you will take the opportunity to respond to mails from a number of traders and sales people, as well as give them a note of the factors that could make a difference to their company.
9am – 11am: You begin to prepare a report for an industry company that Analyst wants to add to the department’s resources. And so, you research that company closely, delving into its revenues and accounts.
11am – 12pm: Your analyst introduces you to some fund managers because he’s busy with a lot of clients right now. These managers want you to be able to provide them with more cool industry insights.
12 pm-2pm: Your analyst asks you to prepare meetings between fund managers and companies in the industry that they are interested in. This is when you use your phone to its full capacity to make calls and email.
2pm – 4pm: You review the work results of the interns and the newly entered associates with lower levels.
4pm – 6pm: You receive information about a shocking event in the market, and must quickly update the projection model to reflect the flow of money more accurately in the near future.
6pm – 8pm: You complete the update and immediately send it to the client. Now you get their feedback and take time to answer the questions and reasons for the change you have made.
And, your day’s work ends there.
9. Equity Research Associate Job – How to get into?
9.1. Recruiting Process
In general, the recruitment process for research shares will be random and lack of scale, much less organization when compared to the investment bank’s recruitment process.
The big banks group can hold undergraduate or graduate students, but when needed, they can immediately recruit new people. Especially at the level levels. As low as Analyst or Associate, when someone leaves, they will find a replacement soon after.
The required normative requirements are still common factors when we read recruitment news in finance and banking in general: with a diploma from a reputable university, good grades, internship experience. analytical skills, and technical skills.
But it is important to demonstrate your passion for the job, especially dedication to public markets.
This can be demonstrated through excellent stock pitches, a thorough industry understanding, or active participation in competitions such as: CFA Research Institute Challenge, etc.
In terms of internships, you might consider working in small hedge funds or asset management firms, before trying at large banks. But these positions are relatively rare, so you can apply for equity research positions at small companies first, then look to larger banks later.
Investment banking internships are also not a bad option, especially if you have offers from big companies, but they are also not too relevant in terms of experience.
You can start your networking process by searching for email addresses from industry experts.
Search for “Equity Research” on LinkedIn, or you can use the service from Bloomberg, FactSet, etc, to search for their emails.
You can also find contact information on old reports, or some banks provide contact information for Equity Research staff.
Once you have the contact information, send them a brief introduction about yourself and look forward to helping and learning.
Once you have completed outreach to one party, be sure to pay close attention to follow up them, while also contacting other parties with the same process.
9.3. Interview Questions
You will encounter a lot of “fit” interview questions when participating in a recruitment session for equity research associate job: your strengths / weaknesses, why equity research, leadership experience, experience your teamwork, story, etc.
At this point, you need to demonstrate excellent communication skills, and perfect presentation abilities of yourself.
In addition, you also need to prove your passion for this field. In case you have internship related to buy-side, you must explain why you want to switch to sell-side.
Regarding professional questions, basically, there are many similarities with questions of Investment Banking. You should prepare questions about accounting, valuation, DCF analysis, M&A and LBO analysis.
9.4. Case Studies and Modelling Tests
In some cases, you will be tasked with solving case studies or handling the modeling test.
Often times, they may ask you to value a company. Rest assured that as equity research associate job you will not encounter any questions related to M&A and LBO.
When doing these tests, the most important thing is to keep yourself calm. Don’t complicate things, and think mechanically about the model and give too difficult explanations.
Focus, condense and draw yourself 2 – 3 biggest factors that have a big impact on Free Cash Flow.
Of course, doing this isn’t easy when faced with timed pressure. But that is why you need to practice carefully at home.
9.5. Stock Pitch
You should prepare yourself for two types of stocks: the first for “Buy” or the second for “Hold” or “Sell”. In addition, please take care to avoid stocks that the interviewer deals directly with.
It would be unlucky to choose a stock that the interviewer knows too well by doing the analysis or monitoring that company 12 hours a day.
For example, if your interviewer has expertise in the consumer / retail industry, choose a stock in food and beverages – an industry relevant enough but the interviewer does not have too much knowledge. and know too deeply about the company you choose.
A suitable structure for your stock pitch might look like this:
Recommendation: Whether to buy, sell, or hold that stock and the company’s value
– Company’s background: Brief information about the company’s products, structure, business performance, revenue, EBITDA, market cap, etc.
– Catalyst: Big events in the next 6-12 months will cause a big change in the value of the company.
– Valuation: Current value of the company and value of shares
Risks and Precautions: Factors that could make what is presented today wrong, and that could be safeguarded by other investments, put / call options, etc.