Equity researchers analyze stocks to help portfolio managers make better-informed investment decisions. Equity researchers employ problem-solving skills, data interpretation, and various other tools to understand and predict a given security’s behavioral outlook. This often involves quantitatively analyzing a stock’s statistical data in relation to recent market activity. Finally, equity researchers may be tasked with developing investment models and screening tools that identify trading strategies that help manage portfolio risk.
Average Salary of an Equity Researcher
While an Oct. 2020 survey by Glassdoor.com found that the average annual salary for an equity research job is around $95,000, most positions pay less. The low end of the salary range is $62,000, while the high end sits at around $142,000. Private equity firms and other financial services companies are the chief employers of equity researchers. The majority of these jobs are based in New York City, although firms are increasingly offering positions in major metropolitan hubs like Chicago, Boston, and San Francisco.
Equity researchers are responsible for identifying patterns with current market price changes and using this information to create algorithms that identify profitable stock investment opportunities. The equity researcher should be able to understand the idiosyncratic differences of various international markets in order to cross-compare domestic and foreign stocks.
Experience and Education
Companies looking to hire equity researchers typically seek candidates with prior data analyst experience, ideally in the financial services sector. Candidates should have a demonstrable ability to interpret equity data and macroeconomic trends. Candidates should be educated in economic and investment theory, and they should have a working knowledge of tools used to aid the investment workflow. A master's degree in quantitative finance or business is preferred, however, a bachelor's degree in computer science or mathematics is likewise attractive to prospective employers.
Candidates should be adept at reading financial income statements, balance sheets, and other key summary report statements issued by publicly traded companies. Candidates should be skilled at flagging warning signs of poor future performance and other abnormalities in a company's statement of earnings. And an understanding of fundamental accounting principles is essential to the job.
Strong communication skills are critical, as researchers must translate difficult-to-understand financial coefficients to portfolio managers. Equity researchers should be hyper-organized and they should be able to distill the broader meaning behind the quantitative information they learn in order to efficiently convey the potential direction of prices.
Equity researchers must be able to cull data from multiple sources and they must be skilled at using data manipulation software and other programs used in the storage of data sets.
Licensing for an Equity Researcher
Certain companies may require equity researchers to have a Certified Public Accountant (CPA) or Chartered Financial Analyst (CFA) certifications. But since equity researchers don’t directly interact with clients, nor do they place to buy and sell orders on behalf of clients, they don’t need to have Series 7 and Series 63 licenses, since they don’t need to be in compliance with the Financial Industry Regulatory Authority (FINRA).
Equity research opportunities are rising, as quantitative models of risk-mitigating trading strategies become more prevalent in the management of commercial and retail portfolios. While the majority of positions are located in New York City, positions in California, Texas, and other states are also on the climb. Mathematical prowess is becoming increasingly important to companies who value quantitative data over qualitative data in order to solve problems.