How much am I worth? Equity research analyst, international investment bank
A panel of specialist headhunters give their assessment of typical London pay packages: Equity research analyst, international investment bank, London: salary 50,000-80,000, with four years experience up to 100k, bonus 50%-150% in good times
For most people in financial markets, accepting dramatic changes of fortune is par for the course these days, but few have had such an unexpected roller coaster ride as equity research analysts.
Through the 1980s and early 1990s analysts generally had a low profile, quietly beavering away on wordy reports away from the main action. Bonuses, more often than not, were derived from how the financial institution as a whole performed, rather than from individual performance.
By the mid-1990s this had all changed: equity research analysts had become the unlikely stars of the market, with packages to match. Not only did they take seats alongside salesmen in the main dealing room; some of the most famous became household names whose very utterances could move markets.
Since the bursting of the technology stock bubble however, the equity analyst has reverted to their former, low profile. With many high fliers disgraced for recommending companies they wouldn't themselves have touched with a bargepole - such as Enron before its spectacular collapse late last year - in order to boost bank profits, reputations at the likes of Merrill Lynch have taken a battering.
The current bear market has hardly improved the lot of analysts either, with some investors wary of long, dull and quite possibly worthless research and more inclined to trust the flip of a coin.
"The market is changing, with the focus shifting away from investment banks towards fund management, where firms are increasingly doing their own research rather than buying it in," says Dev Majithia of TMP Worldwide. "Analysts wanting job security are also looking to work for fund of funds and specialist research companies, even though, typically, rewards are lower."
Majithia says a junior analyst working for an institutional fund manager or fund of funds can currently expect a salary of 45,000-65,000.
The type of research typically done has also changed from the early 1990s, where research analysts were typically bottom-up - looking at the company - or top down, when they looked at particular markets, countries or sectors.
Today an analyst working will increasingly look at a fund or a fund managers' record rather than at the companies that comprise the fund, with an increasing trend towards specialisation; say, looking at hedge funds on the Alternative Investment Market rather than as in the 1980s and 1990s, looking at the energy sector.
Despite that, it is clearly better to be in some sectors than others.
"With banks increasingly focusing on six or seven global sectors, an experienced analyst in oils, pharmaceuticals, banks or media is sitting far prettier than one in say telecoms or technology," says Emma Makins of Alexander Mann Global Markets.
She says that with markets falling there are far fewer guarantees being offered for new hires. Indeed many big names - notably HSBC, which recently stunned the City by unveiling 0% bonuses - but also some of the US bulge-bracket banks, are holding back on bonuses to an unprecedented degree.
With the current wave of job cuts in the City likely to affect analysts as well as other front office staff, this situation is likely to be sustained, with few expecting a pick-up in the market before the end of 2002 or early next year.
Contributors include TMP Worldwide and Alexander Mann Global Markets
