Investment banking, once the undisputed career choice for finance graduates, maybe losing its allure. Equity research, a comparatively unglamorous option, is an equally in-demand job among graduates. Though this is a long-time held perception, the reality is far from this. Equity research may not be as popular as investment banking, but it offers an equally rewarding career. Both careers offer good prospects.
This post will compare the career-related aspects of both for you to form an opinion.
What is investment banking?
Investment bankers help other companies raise capital for expansion, building new ventures, and facilitate organizational restructuring. They also facilitate M&A (mergers and acquisitions) where they help their clients seek the best price for acquisitions (on both sell and buy-side).
Investment banking professionals require people skills. It has a touch of sales to it. In fact, research analysts who spend most of their time on research and consulting require to interact with clients, which makes it essential for them to have good people skills.
MBA is the most preferred choice among employers. However, companies are now open graduates with minors in economics, finance, mathematics, computer science, and related subjects. Further, investment banking certifications are increasingly becoming popular.
What is equity research?
Equity researchers perform research on stocks to help portfolio managers make better-informed investment decisions. These researchers employ the number of tools and problem-solving. They study patterns in the stock market and perform analysis to predict future stock behavior.
Equity researchers are also tasked with building investment strategies and build algorithms that identify profitable stocks. They are also required to understand individual differences between the international stock market to compare international and domestic markets.
Equity researchers are employed by private equity firms, stockbrokers, and other financial services firms. They can be paid as much as $158,000 at the best, according to Glassdoor. On the lower end, their salary is around $65,000.
Employers, typically, prefer finance, mathematics, economics, or MBA graduates for the role.
Let’s discuss some prominent aspects of the two careers-
- Work-life balance—The investment banking industry is notorious for its long working hours. An investment banker may spend 90-100 hours a week. Equity researchers, on the other hand, spend comparatively less time. On average, they can spend 12-hours in a day, but it is calmer at times.
- Recognition – Equity researchers are recognized more compared to investment bankers. Senior researchers often get their names published on equity reports distributed to the company’s sales team, clients, and other stake holders. Media and capital market correspondents often approach researchers who are experts on specific company’s stock when the company publishes report. Investment bankers are often shadowed unless they are working on large and prestigious deals.
- Career advancement – Investment bankers are winners in this area. Their career grows faster compared to equity researchers. From an analyst (2-3 years) to associates (2-3) and then vice-president, Investment bankers grow fast. Further, certified investment bankers who have validated their skills by taking certifications may experience accelerated growth than non-certified ones. While for an equity researcher, the growth is slow. Typically, their career trajectory goes this way –analyst, associate, senior associate, Associate manager and so on.
Compensation – Over a long time, investment banking is a lucrative career. Investment banking associates earn an average $138,000 in salary. Plus, bonuses up to $40,000. For vice presidents and managing directors, the compensation goes up to $4,00,000. The average salary of equity researcher is $97,000 per annum, according to Glassdoor.