Path to Equity Research: A Guide to Becoming an Equity Analyst
This comprehensive guide outlines the essential steps and qualifications needed to embark on a successful career in equity research. From acquiring the right education to gaining practical experience and earning industry certifications, each section is designed to help you navigate the path to becoming a professional equity analyst.
1. Getting an Education
Starting your journey towards a career as an equity analyst with a solid educational foundation is crucial. As early as high school, focus on subjects like math, business, reading, writing, and analysis, as these will be directly relevant to your future role.
A. High School Preparation: Earn good grades to gain access to the college or university of your choice. Begin focusing on math and business courses. Avoiding weak subjects will give you a strong background for future studies.
B. Earning a Degree: A college degree is necessary to qualify for a job as an equity analyst. Consider both a bachelor’s and a master’s degree to enhance your job prospects. Focus on degrees in economics, finance, or business, as these provide a strong foundation for equity research.
C. Completing a Master's Degree: A graduate degree significantly expands your employment opportunities. Look for advanced studies in economics, finance, or business. Courses such as bond valuation, risk management, corporate finance, and equity valuation will prepare you for a career in the field.
D. Advanced Professional Courses: Even after being employed, continuously taking professional courses can further your career. These courses cover the basics of equity report writing, including topics like assessing industry attractiveness, financial modeling, equity valuation techniques, and equity and investment report writing. Check with your employer for education reimbursement and potential salary increases.
2. Landing a Job as an Equity Analyst
Entering the field of equity analysis requires more than just a degree; gaining practical experience and building professional networks are equally important.
A. Internship: Gain hands-on experience through a relevant internship. Interns are assigned to mentors, providing both on-the-job training and educational development. Additional information on internship opportunities can be found through academic resources, guidance counselors, or reference librarians.
B. Professional Focus: Decide whether to pursue a career as a sell-side or buy-side analyst. The nature of the work differs significantly between the two roles, as explained in more detail below.
C. Building a Professional Network: A strong network is crucial in the field of equity analysis. Attend industry conferences, seminars, and networking events. Participate in relevant industry associations and online communities.
3. Earning Advanced Certification with a CFA
The Chartered Financial Analyst (CFA) certification is the gold standard in the field of equity research.
A. Investigate a Joint MBA/CFA Program: Top business schools offer joint MBA/CFA programs. This allows you to earn the required work experience and achieve the CFA certification more efficiently.
B. Complete Four Years of Relevancy Work Experience: To become a CFA, you must complete 48 months of relevant work experience in the financial field. The definition of relevant work is broad and includes areas such as trading, economics, and corporate finance.
C. Prepare for the CFA Exams: Pass three successive levels of exams to earn the CFA charter. The CFA exams are offered in specific times, and the passing rate is traditionally low. Plan to study extensively, estimating at least 250 hours of study for each level.
D. Register for the CFA Exams: The CFA exams include ethics, quantitative methods, economics, financial reporting and analysis, corporate finance, equity investments, derivatives, alternative investments, portfolio management, and wealth planning. The CFA Institute provides free study materials, and there are various commercial study programs available online.
E. Notify Your Supervisor: Discuss your CFA plans with your supervisor to ensure they are aware of your commitment. Upon obtaining your certification, inform your supervisor and include it in your personnel file for future advancement opportunities.
To further your knowledge in equity research and financial analysis, you can learn more about the CFA program and the exams by visiting the CFA Institute Website and accessing the free study materials.