This Post is part of the Careers in Australian Finance series.
What is Equity Research?
Equity Research involves researching companies for the purposes of valuing companies and recommending the purchase or sale of Public Companies. There are two sides to Equity Research, the Buy-Side and the Sell-Side.
Buy-Side: Involves working within a Funds Management business and analysing companies in order to make decisions about where the Fund’s money is invested.
Sell-Side: Involves working in a Brokerage and preparing Research Reports on companies that you cover, then marketing the research to Fund Managers and their Analysts in order to generate Brokerage income.
Both Buy-Side and Sell-Side Analysts build and maintain Financial Models and write Reports on the companies they work on. More senior Equity Analysts add substantial value by having substantial networks in their relevant industries as well to be able to gain unique insights into their industry/ies of specialisation.
In terms of hours, Sell-side analysts generally have a morning meeting that will be scheduled for some time before 8am, so you have an earlier start than in other career paths. Generally an 11-12 hour day is about standard, longer in some firms, shorter in others. Pay can be phenomenal for experienced and successful Equity Analysts on either the Buy-Side or Sell-Side, although in Australia there is generally more money available earlier on the Sell-Side. The most money is earned as an Owner/Manager of a Fund (ie senior buy-side) however this is something difficult to obtain. Once you get there if you are successful you earn bigger than basically any other career in Finance. This is a massive ‘if’ though, as most people underestimate how competitive the Equity Research industry is and how smart and knowledgeable most of the existing players are.
What do I need to do to get a job in Equity Research?
Equity Research is basically as competitive as M&A and other Corporate Finance areas to get a job, especially at the more prestigious firms, although there are a lot of smaller Brokerage firms around and they often have less stringent requirements than the multi-national Brokerages. Knowledge of Finance and Accounting is pretty essential to be successful in these roles, however often industry specialists will have a strong chance (eg Engineers for Mining or Construction Analyst roles) of competing for these roles. The CFA will help your resume a lot for these roles too. Otherwise generically you need top marks and if you go to the Sell-Side you need to be willing to call clients and sell your research.
Who is hiring in Equity Research in Australia?
All the Investment Banks, CBA only from the Big 4 (See links in our Corporate Finance & Advisory article), and all the Brokerages. As well the following firms often have roles for Graduates and Junior Analysts in Equity Research (there are lots of others that recruit far less frequently):