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What's The Distinction Between Equity Research And Investment Banking?

Nov 09, 2023 By Susan Kelly

Investment bankers facilitate merger and acquisition negotiations and the release of new securities. Equity researchers perform in-depth analyses of firms and their share prices to provide investment advice. Candidates' schedules and work preferences may fluctuate depending on the position they're applying for.

Differences Between Equity Research and Investment Banking

Potentially, investment banking is no longer the clear-cut favorite of the most intelligent and capable young adults. Many of today's best college graduates are eschewing the once-popular investment banking industry in favor of other fields, such as management consulting, technology, and even starting their businesses.

While hard hours and pressure still draw many people to investment banking, the field's appeal has waned in recent years. Potential financial sector workers can also find work in equity research.

Market Analysis

Equity researchers aid portfolio managers in making more educated trades by analyzing stocks. Researchers in the field of equities use analytical reasoning, data interpretation, and other methods to learn about and forecast the future performance of certain securities.

Banking On Capital Investments

Finance institutions have a specialized "investment banking" sector that focuses on raising money for other organizations, businesses, governments, or nonprofits. Investment banks assist in selling securities, broker trades for institutional and private investors, and underwrite new debt and equity securities for all types of corporations.

Life and Work Harmony

One may safely say that equity research comes out on top. Equity research associates and analysts typically work 12-hour days but get periods of relief. Earnings season, when company financial reports must be quickly examined, and the beginning of coverage on a new sector or individual stock also rank high on the list of busiest times.


Furthermore, this is another field where equity research excels. One common way associates and junior analysts are recognized for their efforts is by having their names in research reports disseminated to the firm's sales team, clients, and media outlets.

The media seek out senior analysts to comment on the firms they cover after they report profits or announce a significant development because they are the sector's go-to experts in that area.


The field of investment banking emerges victorious. In investment banking, there is a well-defined professional ladder with certain milestones. After two to three years as an analyst, one can advance to the role of associate, then, after another three years, to that of vice president, and then to that of a director or managing director.

Work Duties

Similarly, investment banking is likely to succeed in the longer term. The analyst covered a certain industry or set of firms that typically assign equity research colleagues a large amount of financial modeling and analysis to complete in their early stages. Associate interactions with buy-side clients, covered firms' top management, and the firm's traders and salespeople are limited.

Academia and Titles

Candidates for equities research analyst and investment banking associate positions must have at least a bachelor's degree. Economics, accounting, finance, mathematics, physics, and biology are common topics of study; yet, it is highly doubtful that a bachelor's degree alone will be adequate to secure a career in these subjects.

Abilities, Abilities, and Skills

Equity research analysts, like data analysts, need strong analytical and mathematical/technical abilities. These analysts need speed and accuracy in their ability to compute, model, and produce financial statements. Initial responsibilities for investment bankers and research analysts often include financial modeling and in-depth analysis, as mentioned earlier.


Research analysts and investment bankers that have proven their worth typically have their pick of lucrative job offers from a wide variety of companies. Research analysts often find employment with "buy-side" (or "asset management") firms like hedge funds, mutual funds, and pension funds. In contrast, "sell-side" professionals like former investment bankers sometimes find work with private equity and VC firms.

Imposing Obstacles

Barriers to entry are high for investment banking and equities research, but they may be significantly lower for the latter. Although professionals with years of experience in a particular field may move from the buy-side to the sell-side to work as stock analysts or senior analysts, this is unusual in investment banking.


Though investment banking and equity research pay well, investment banking proves to be more lucrative over time. Investment bankers have made a name for themselves in the business world because they are famous for their hefty salaries and signing bonuses.


On the other hand, research analysts receive additional compensation from a bonus pool in addition to their base wages. These bonuses are awarded quarterly, depending on factors such as the profitability of the company, the strength of the capital markets division, the analyst's recommendations, and the firm's overall rating among buy-side investors.

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