Equity Research vs Investment Banking
Which career is a better fit?
Which career is a better fit?
When looking at a career in the capital markets it’s important to understand if you’re a better for investment banking or equity research. Both offer excellent work experience and great pay, but choosing one over the other really comes down to personality more than anything else. This guide will break down the key differences between equity research vs investment banking.
Research analysts cover a group of stocks (coverage universe), typically within one industry, and publish reports with their recommendation on whether investors should buy, sell, or hold (overweight, underweight, market weight) the stock.
Typically, the work in equity research requires:
The work of an investment banking Analyst/Associate mostly requires the following activities:
The type of person who’s suited to equity research is someone who enjoys writing, routine, financial analysis, and is introverted.
The type of person who’s suited to investment banking is someone who enjoys writing, routine, financial analysis, and is introverted.
Research analysts work long hours, but not nearly as long as investment banking. They typically start earlier around 7 or 8 am and work until about 8 pm. In research, you should plan on 12 hour days as being fairly routine, whereas investment bankers should plan on 15+ hours.
While there is lots of work in equity research, it is less volatile and erratic than investment banking where there is no predictability about deal flow.
Starting base salaries are comparable for research and investment banking, but there is a large difference in the bonus structure. While junior investment banking positions can earn 50-100% of their base in the form of a bonus, in research it could be closer to 0-25%. Check out our compensation guides for more details.
The reason for the lower bonuses is because equity research is often viewed as a cost center as opposed to a profit center for the banks. This may be true but equity research plays a critical role in helping other divisions make money. Having a reputation for high-quality coverage increases your chances of leading an IPO or follow on offering and often rewarded by investment managers by making their trades through that bank.
That’s entirely subjective.
In equity research, you working with publicly available information, speak frequently with management and prepare recommendations.
In investment banking, you are often dealing with non-public information, work in deals and transactions, and have more of a sales angle.
Both are super interesting – it’s about which is a better personality fit for you. Both require a lot of financial modeling and both can be very rewarding.
This has been a guide to equity research vs investment banking. For more relevant resources, please check out these additional career guides below:
Advance your career in investment banking, private equity, FP&A, treasury, corporate development and other areas of corporate finance.
Get certified as a financial analyst with CFI’s FMVA Program.