Equity research analyst, intermediate: How much am I worth?
Those who predicted the institution-based equity research analyst was an endangered species have been proven wrong.
The writing really had seemed to be on the wall after the Dot.com bubble burst. With analysts seen as responsible for over-inflating the earning capacity of tech stocks and many in the US criminally charged for dubious, over-friendly research, independent boutique research houses seemed to be the only recourse for the would-be analyst.
But no. Open the job pages of any serious newspaper - or indeed, scroll though our copious online job pages - and you will find banks and search firms crying out for analysts. Why? According to head-hunters, bulge-bracket and first tier firms in particular are beginning to rediscover the value of individuals who can make sense of a balance sheets and provide sound, impartial advice about companies. With tighter official regulations in place the feeling is widespread that there are now sufficient checks and balances to avoid a repeat of past abuses.
However there is also a stronger focus on finding quality candidates: strong analytical skills and good maths, with a degree from a good university, are the very least that are required of a junior, whille intermediates are expected to have passed all the relevant professional examinations, including those required by the FSA.
"Now equity markets are on the move again, analysts are very much back in demand," says Jamie Risso-Gill of Robert Walters, adding that with IPOs currently the rage, new stock analysts and surprisingly, technology, are both seen as sexy sectors. Also very much in vogue is energy and emerging markets, with premiums paid for high calibre individuals with a good track record.
Emma Halls, a manager at Finance Professionals, agrees that the market is buzzing, particularly for intermediate-level analysts.
"Banks are having to compete harder to secure the best talent as most of them are recruiting," she says, suggesting this is a complete about turn from even a year ago when they could offer less than attractive packages because there were so many redundant individuals on the market after the 2003 culling.
"With competition high across the banks, there has also been leakage into hedge-funds and boutiques, so good candidates can command more money, although the attraction for a lateral move is less now," adds Halls.
How much is "more money"? Risso-Gill suggests bulge-bracket and first tier banks will pay between 55,000-75,000 with a bonus - dependent on performance - of up to 100%. He adds that for this year bonus prospects look "very encouraging".
Halls is more specific, suggesting that for the coming year an analyst with three years' expertise under his or her belt will typically be on a base of 55,000-60,000 with a bonus of around 50%, largely dependent on where you and your bank team are placed in the official rankings list. She says bonuses may also be sector specific: right now, that means your Christmas shopping list will look rather less generous if you cover retail rather than oil and gas, which for obvious reasons have been enjoying a good year. But Halls adds a cautionary note.
"The days of the 100% bonus are still not back, and as long as banks struggle to understand how they can make money from their research teams in the post-Spitzer era they are unlikely to get back to the astronomic levels of 2000."
This suggests that although the species may not be facing extinction, it has to scrabble rather harder than before to flourish. As Darwin might have put it, only the toughest, brainiest and best placed can be truly confident of their long-term prospects.
Figures and commentary by Robert Walters and Finance Professionals
