A equity research analyst studies stocks of a company and determines its attractiveness, thereby giving source of information to investors. They’ve to be vigilant about the latest news and trends that surround the equity of that company. Let’s explore what skill sets are necessary for an equity research analyst –
Fresh candidates join the industry as Associates assisting the more senior Analysts. So the key skills for an entry-level role would be:
Strong analytical and reasoning skills: Associates have to be strong in analytical ability. They need to draw out the story behind a company’s data, whether qualitative or quantitative
Knowledge of financial statements and their analysis: Big banks conduct their own training programs and teach their incoming batches everything from scratch. However, during lateral hiring or in the case of boutique firms that don’t have training resources, a candidate that knows the basics of financial analysis would definitely have an edge over others. Associates are encouraged to invest in a CFA program (Most firms usually refund the exam fees if cleared in the first attempt)
Attention to detail and diligence: Any small error made by the Associate / Analyst in their analysis can cause huge losses for the investors that depend on their opinion. Hence, it is extremely important to be thorough and pay very close attention to detail
Ability to develop industry expertise: To be successful in this field, Associates must aim to become experts in their sectors. This would translate to becoming a top notch Analyst and a force to reckon with among the industry players
Writing and presentation skills: An Equity Researcher must communicate well, at least in the written form to begin with. As he/she becomes an Analyst, apart from coming up with well written reports with reasonable predictions, networking abilities also become important as he/she may have to do marketing events like arranging non-deal roadshows for their clients
How to get in:
- Make it to the top tier B schools – meaning the IIMs A, B, C or ISB or other institutes in this league. Bulge bracket banks visit these campuses to select Associates for their ER division; either via internships or directly via their global ER program
- You may also graduate from the next tier of MBA institutes (MDI, IIFT, IIT SOMs etc.), or complete Chartered Accountancy. Supplement this with a CFA charter and / or certifications like the FRM. It may also serve you well to know financial analytics and modeling. This could land you with an ER job in smaller Indian firms.
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