Investment Banking vs Equity Research as a Career Choice?

Vampire is not a career choice

Vampire is not a career choice (Photo credit: quicheisinsane)

How Does Investment Banking Measure Up Against Equity Research as a Career Choice?

With the economy still in flux and many businesses and families still in the process of recovering from the financial crisis several years ago, the financial industry has taken a hard rap. Most people need something to point a finger at or someone to blame for their troubles. Unfortunately, many have unjustly laid the blame on the financial industry as a whole. Even with all of the uncertainty associated with the current financial market and the seemingly hostile view of the financial industry, there are still some exceptionally lucrative and fulfilling opportunities in the financial market.

If you have been considering a career in the finance industry, you most certainly have heard of the term investment banker. Many students and financial professionals explore opportunities in investment banking, but what many people are unaware of is the opportunities in the financial market for equity researchers. Equity researchers don’t get the public exposure that investment bankers receive, but there is definitely great potential in equity research for the right type of person. This article will briefly explore the benefits of both investment banking and equity research to provide some background information that will allow you make an educated decision as to which route you may want to take.

Investment Banking

In simple investment bankers work for firms that assist corporations, governments and individuals in securing capital through an underwriting process and/or functioning as an agent for the client in issuing securities. Basically an investment banker facilitates the generation of revenue through negotiating the transference of securities.

It is a well-known fact that investment bankers live intense and stressful lives. Weather the investment banker is trading securities or promoting them through underwriting and research, there are long days that extend well into the night. It is the life of an investment banker. There is, however, great financial benefit to those who master there craft in this area. The exit opportunities are great as well.

Equity Research

An equity research analyst is an individual who anatomizes small groups of stock for the purpose of providing technical and factual insight to a financial firm’s sales force. In other words, an investment banker would probably seek the insight of an equity research analyst when evaluating his recommendations to a client.

Although equity research analysts have traditionally provided their services to financial institutions, there is a recent trend that is seeing an increasing number of analysts who are providing their valuable insight to the general investing public.

As a general rule, equity research analysts tend to focus their research into a small group of stocks, with no more than 5 to 15 within a specific industry. This allows them to develop an astute understanding of the stock; becoming experts in that particular area.

Is Equity Research For You?

Whether being an equity research analyst is for you or not depends on several variables, beginning with lifestyle. The hours that an equity researcher works is far less than that of an investment banker. The typical day for a researcher may be 7am – 6:30-7pm verses working past midnight on many occasions for the investment banker. For a person who is family oriented, this type of schedule may be more suited for you.

Compensation Comparison

At the entry level, both investment bankers and equity research associates start with comparable base compensation packages, but that is where the similarities end. Investment bankers bonus structure provides bonus incentives that are anywhere from 10 to 50 percent higher than that of the equity research associate. The disparity in pay between these two professions only widens as each person moves along in in their career. This is primarily because of simple economics.

An investment banker is actually responsible for generating revenue for a firm, which makes their work more quantitative. On the other hand, the research conducted by and equity research analyst is extremely valuable, but the analyst does not sell any of the securities they research, so there is no direct revenue generation.


If money is your primary focus, investment banking will provide a much more lucrative career than will equity research. If you are looking for something that is more family friendly and significantly less stressful, then becoming an equity research analyst may be for you. The quality of the work environment will be better for the equity research analyst, but the ability to parlay your skills into better outside opportunities is better facilitated in investment banking.

The important thing to see in this evaluation, is that either way that you choose, there are great career opportunities in the world of finance. Which route is best for you is best determined by you.

One response to “Investment Banking vs Equity Research as a Career Choice?

  1. Great Article. Would be interesting to read about how to break into ER with CFA level II passed and MBA degree. Been trying that and had a hard time getting any interviews.

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