Career advice: financial analyst vs stock market analyst

Financial analyst vs equity analyst: an overview

Young professionals who have a quantitative bent, skilled problem solvers, logical thinkers, and stay on top of the markets should consider a career as a financial analyst. Broadly speaking, financial analysts examine financial data to help companies make investment decisions.

Some financial analysts work in-house and help their employers make investments, while others work for third-party companies hired by external clients to provide expertise. The field of financial analysis is a fairly broad category. Some financial analysts look at the big picture, analyzing overall market trends to locate profitable investments in different sectors and market segments. Others take a micro approach, breaking down investment opportunities company by company to try to identify the investment potential of each. These professionals are called equity analysts.

Financial analysts

Financial analysts examine the overall performance of a company or industry using a variety of metrics. They review financial decisions based on current economic and market trends, stated business goals, and possible investment options. It’s important to note that a financial analyst is interested in both a company’s equity and debt, as well as economic data.

A degree in finance is probably most beneficial for aspiring financial analysts, although math or economics may also suffice. A master’s degree in business administration (MBA) can help a financial analyst, but it is not always required.

Financial analysts earned a median annual salary of $ 83,660 in 2020, the most recent year for which figures are available, according to the Bureau of Labor Statistics (BLS). The top earners brought in nearly $ 159,560 and those at the bottom about $ 48,760.

Financial analysts tend to earn the most in large financial centers, such as New York or San Francisco. Bridgeport, Connecticut, and Medford, Oregon are also lucrative destinations for analysts. Increased regulations and market complexity are driving the growth of financial analysts, especially among large companies with many assets to manage.

Equity analysts

While financial analysts consider a wide range, equity analysts focus on the stocks of companies, the equity part of the capital structure. Equity analysts start by performing financial modeling and analysis and are responsible for covering a specific industry or group of companies. They produce research reports, projections and recommendations regarding companies and stocks. Typically, an equity analyst specializes in a small group of companies in a particular industry or country to develop the high-level expertise needed to produce accurate projections and recommendations. These analysts monitor market data and newsletters and interview contacts in the companies and industries they study to update their research daily.

Issuing buy, sell or hold recommendations is a key task of the stock analyst. Associates and junior analysts are often recognized for their work by being named on research reports that are distributed to a company’s sales force, clients and media. Because senior analysts are recognized experts in the companies they cover in an industry, they are sought after by the media for comment on those companies after they have released results or announced material development.

Buy-Side and Sell-Side Analysts

There are two types of equity analysts: buy-side analysts and sell-side analysts. Buy-side analysts work for fund managers of mutual fund brokers and financial advisory firms. They look for companies in their employers’ portfolios, as well as other companies that may represent profitable investment opportunities. Based on this research, they prepare reports that offer buy and sell recommendations to management.

Sell-side equity analysts often work for large investment banks, such as Goldman Sachs. Their job is to research the financial fundamentals of the companies the bank plans to go public and determine which ones have the greatest potential to become profitable.

For aspiring financial analysts, one of the most important decisions is whether to specialize as an equity analyst or pursue another niche within the larger framework of financial analysis. The following comparison explains some of the subtle differences between a career as a financial analyst and an equity analyst.

Education requirements

No licensing board or regulator has set strict training minimums for financial analysts or stock analysts. However, a bachelor’s degree has become a de facto minimum for receiving an offer of work in one or the other field. Beyond that, the individual companies that hire set the standards.

Because financial analysis is the broader of the two careers, there are more job opportunities, from huge Wall Street investment banks to insurance companies and local small businesses. Educational standards may vary depending on the path followed by the candidate. At the very least, they should have a bachelor’s degree, with the most preferred majors being economics, finance, and statistics.

Equity analysts are much more concentrated on Wall Street in the big investment banks. Big banks are known to seek out the best of the best when hiring college graduates. For this reason, they focus their recruiting efforts almost exclusively on top-tier schools, such as Ivy League Schools, Duke University, and the University of Chicago. While applying with a degree from a lower-rated school doesn’t spell the end of the game, the fact is that statistically a Princeton University graduate is much more likely to land a job as an analyst. ‘shares compared to a graduate of a major state university. For graduates of non-leading schools who still wish to pursue equity analysis, their best bet is to enroll and graduate from an elite MBA program.

Required Skills

Financial analysts and stock market analysts need strong analytical and quantitative skills, problem-solving skills, and, just as important, a love for the markets. Just as a financial advisor or stock broker constantly monitors the pulse of the market, analysts who study investment data must do the same to draw accurate conclusions from the data.

While both careers require hard work and dedication, stock analysts in particular, due to the nature of their potential employers, must be prepared for a difficult task and many hours of work. A job at a large investment bank isn’t a 9 to 5 job with weekends off. The average work week, especially in the early years, could very well be over 80 or 90 hours. In fact, some banks have dorms so analysts working at night can crash for a few hours before returning to their desks before the opening bell the next day.

Starting salary

A stock analyst almost invariably makes more money than a traditional financial analyst, but he spends many more hours making that money. According to, the average base salary for a financial analyst is $ 60,716 per year. Bonuses, when granted, are generally small and linked to the performance of the company, and not to individual measures.

Stock analysts, on the other hand, earn a median base salary of $ 89,191. When you add potential bonuses, the median salary rises to $ 95,324 per year. Most financial analysts, although they earn above average incomes, have to work many years before they reach the income an equity analyst can earn in the first year, and some never do.

Employment prospects

According to the BLS, the job outlook for financial analysts is strong through 2030. Expected job growth in the field is 6%, slightly lower than for other occupations. The BLS combines stock analysts with financial analysts when making employment projections.

It should be noted that the job market for equity analysts is, for obvious reasons, linked to the health of the big banks. This health was precarious for a period beginning in 2008, but thanks to restructuring and an injection of taxpayer-financed aid, investment banks are doing much better. Assuming there is no subsequent turmoil, equity analysts should continue to benefit from a strong job market.

Which one to choose

These careers require similar skills, education and background. One consideration is the type of employer you want to work for. If you prefer a smaller or midsize company, you have a much better chance as a financial analyst given the aforementioned fact that most equity analyst positions are at large investment banks.

Another consideration is, of course, money. If your main goal is a big salary, become a stock analyst at a big bank. Keep in mind that you are likely going to be settling down in the office for a night of work while your fellow financial analysts are at the gym, happy hour, or playing Recreational League softball. If work-life balance is at the top of the list, lean towards financial analysis and definitely stay away from the big investment banks.

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