How to become An Equity Analyst

While it is important not to miss the woods for the trees, sometimes it is important to notice each tree. An Equity Analyst breaks down the big and often confusing picture of investment into individual investment opportunities, company by company, to pinpoint the investment potential of each. Equity Analysts evaluate stocks and bonds and develop financial models and forecasts to guide individual investors, brokers, and investment consultants in leveraging stocks and bonds to achieve profit.

• Equity Research Analyst
• Equity Associate
• Equity Research Associate

What do Equity Analysts do?

An Equity Analyst would typically need to:

• Provide expert financial advice to clients on buying, selling or holding various securities, including stocks and bonds
• Develop expertise in generating accurate projections and recommendations as related to a small group of enterprises in a specific industry or region 
• Monitor market systems, data, performance and changes; analyse news reports
• Initiate research related to the securities data of target industries and firms and assess potential equity investments
• Assist senior analysts and other team members with investment research; liaise with investors and brokers 
• Assess stock performance by compiling financial statement analysis and streamlining dense and complex financial data
• Stay in daily touch with their company and industry contacts to update research
• Use financial modelling to prepare projections, forecasts, charts, dashboards and supporting material for investors and brokers
• Prepare sales, trading and investment and other research reports and publications to present to management, shareholders and investors
• Stay abreast with the latest trends in different industries

Many Equity Analysts work at large financial firms or other major financial centres, primarily in corporate offices but frequently travel to visit companies or clients. Jobs are typically available in urban areas, which are also financial hubs in a particular region. The dress code for Equity Analysts depends on the location, sector, size, and type of company but would be business formal for the most part.

Equity Analysts generally work regular business hours from Monday to Friday and may put in even 9 to 12 hours per day or 50 to 70 hours a week. Their schedules may vary depending on the need to meet deadlines or during peak market times.

Finding a new job might seem challenging. Equity Analysts can boost their job search by asking their network for referrals, contacting companies directly, using job search platforms, going to job fairs, leveraging social media, and inquiring at staffing agencies.

Equity Analysts are generally employed by: 

• Financial Firms
• Investment Banks
• Asset Management Companies
• Insurance Firms
• Investment Advisory Firms
• Boutique Investment Firms

Professional associations and organisations are crucial for Equity Analysts interested in pursuing professional development or connecting with like-minded professionals in their industry or occupation. Membership in one or more adds value to your resume while bolstering your credentials and qualifications.

• An imbalance between one’s professional and personal life due to work pressures and long hours, often without additional remuneration
• Health problems caused due to sitting down for long hours and working on computers

Any academic program undertaken by a potential Equity Analyst typically requires a period of supervised experience, such as an internship. Internships provide candidates with a glimpse into the work environment and prepare them for the pressures that the career entails. They also teach you tricks of the trade and help you build a network that can be of use later to acquire a job.

You may also undertake internships during summer breaks under the supervision of experienced senior analysts. You may get an opportunity to assist with building financial models and industry databases, creating reports that can support investment ideas, and developing marketing materials. You may even be assigned the task to research annual reports, financial findings and publications to find the data needed. Internships teach you tricks of the trade and allow you to gain expertise in the field. You can also make connections with people you may work alongside shortly.

Sign up for career fairs to meet with recruiters face-to-face, have them get to know you, and make a favourable impression on them. Career experience in roles such as analyst or finance analyst can lead you to become an Equity Analyst. Read about the profession and interview or job shadow experts working in equity analysis to prove your commitment to course providers and prospective employers.

Varying levels of qualifications are required for this role, depending on the employer. Most may be more concerned with prior experience and skills, whereas others may want formal qualifications.

Equity Analysts typically require a bachelor’s or associate degree in business, accounting, finance or economics. You may also major in a subject that fosters in-depth quantitative skills, such as mathematics, statistics, engineering, and physics.

Though not mandatory, a master’s degree in finance or an MBA  (Master of Business Administration) may help career progression, particularly into portfolio and fund management roles.

Certification demonstrates an Equity Analyst’s competence in a skill set, typically through work experience, training, and passing an examination. When acquired from an objective and reputed organisation, it can help you stand out in a competitive job market, carry a significant salary premium of up to 18 per cent, increase your chances of advancement, and allow you to become an independent consultant. Successful certification programs protect public welfare by incorporating a Code of Ethics.

Chartered Financial Analyst (CFA), Certified Financial Risk Manager (FRM), and Certified Investment Management Analyst (CIMA) certifications are highly valued.

Performance, experience, and the acquisition of professional qualifications drive career progression. Employees with consistently high performance levels may be eligible for promotion every two to three years.

Candidates typically begin at the entry-level role of research associate. While you may progress to senior research roles without higher academic qualifications, acquiring a master’s degree may facilitate your career progression to Senior Equity Analyst. With a high level of expertise, you may become an Investment Manager in charge of a team and an investment portfolio. 

Relevant academic qualifications and experience in data handling techniques will accelerate your job prospects, as will skills in handling big data, the internet of things, artificial intelligence, blockchain, and the ability to interpret and present their data and findings.

Continuing professional development (CPD) will help an active Equity Analyst build personal skills and proficiency through work-based learning, a professional activity, 

formal education, or self-directed learning. It allows you to upskill continually, regardless of your age, job, or level of knowledge.

To stay abreast with evolving technology, you may consider taking in-person or online courses in business analytics, statistics, and data visualisation techniques. Business administration courses may prove helpful in building your business acumen and giving you a competitive edge in the job market.

What is Copycat Investing?

Copycat investing, also known as side-car or coattail investing, is a popular strategy that mimics famous investors. You can easily track an investor’s buy/sell activities as it is mandatory for them to reveal the names of companies in which they hold more than 1% shares and then replicate them.

Buy-Side Analyst vs Sell-Side Analyst  

Buy-side analysts (buy-siders) determine how profitable an investment appears and how it can scale a portfolio’s net worth. They usually work with money management firms such as mutual funds, pension funds, trusts, and hedge funds. Sell-side analysts work for investment banks or brokerage firms, helping clients decide if they should buy or sell certain stocks. 

Potential Pros & Cons of Freelancing vs Full-Time Employment

Freelancing Equity Analysts have more flexible work schedules and locations. They have full ownership of the business and can select their projects and clients. However, they experience inconsistent work and cash flow, which means more responsibility, effort and risk. There are no paid holidays, and sick/maternity/paternity leaves are almost unaffordable. There is the added pressure of a self-employment tax and no eligibility for unemployment benefits.

On the other hand, a full-time Equity Analyst has company-sponsored health benefits, insurance, and retirement plans. They have job security with a fixed, reliable source of income and guidance from their bosses. Yet, they may experience boredom due to a lack of flexibility, ownership, and variety.

When deciding between freelancing or being a full-time employee, consider the pros and cons to see what works best for you.

Warren Buffett, regarded as the most successful investor ever, acquired Berkshire Hathaway in 1965. Today, it has the most expensive shares in the world.

The role of an Equity Analyst is a high-profile position earned through years of dedicated work. Much sweat and personal sacrifice go into achieving success.

However, you will have a lucrative salary and excellent growth opportunities once you make it. The competition is tough, but the rewards are plentiful for those who succeed.

Make sure you have a passion for living, eating and breathing stocks and bonds and a mind for data analytics. First, select an industry that interests you and list the companies related to it using the right resources. Then, narrow down your list based on location, size, and valuation criteria. Obtain financial statements and analyse them so that you can generate a forecast. Carry out a discounted cash flow analysis (DCF) to set a value for each company.