Have you ever wondered what skills it takes to get a job in investment banking (IB) or equity research (ER), and what the career paths for these roles could be?
Victoria Biggs (Managing Partner) and Meredith Jordan (Partner – Listed Markets & Asset Management) from Platinum Pacific Partners share their valuable insights into the roles within IB and ER, the career progression from Analyst to Associate to Vice-President, and the kind of candidates who thrive.
What does career progression look like, moving from Associate to Senior Associate to Vice-President (VP)? What does each role entail?
ER – Initially when starting a career in equity research, you would partner with a lead /covering Analyst and learn to model the companies, plus assist with writing research notes, alongside updating research notes. You would also typically engage with sophisticated buy-side equity investors regarding any queries they may have on the team’s research, models or the view of the research team on the company as to why it’s a buy, sell or a hold. Once you are comfortable with all aspects of the role (which you would have learned by assisting the lead Analyst), you may be given the opportunity to cover your own stock and present your own view on whether that is a buy, sell or a hold, to market. This is usually when one would see career progression, after around 18-24 months in the role. Thereafter, progression continues with the more stocks you would cover in your own right. Corporate titles will also dictate career progression and salary increases. It can be that you may change corporate title (e.g. Associate to Senior Associate) and have an increase in salary without taking more stock coverage, as this is a tenure related career progression. Similarly, progressing to Vice-President is usually based on tenure as well as stocks under coverage, feedback from investors and how you are rating with the client base.
IB – Career progression is very lock-step in IB and you would typically be an Analyst for 2.5 years, Associate for 3 years, VP for 3 years and so on. If a person doesn’t make it up a level in the normal timeframe, it is a sign they should leave or will be retrenched. The Analyst years are where the base skills are developed. Initially, this is presentations and practicing attention to detail, and then quickly progresses to modelling. In IB, models are built from scratch with some sectors such as Infrastructure and FIG being more technical than say, Healthcare or Consumer. The models might be, for example, DCF, 3 statement or LBO. Being an Associate means being responsible for the Analysts’ work and reviewing it while maybe stepping up to support the VP in managing some aspects of the deal. The VP can be referred to as the quarterback, sitting between the junior and senior team and ensuring the project management of the deal. At this level, confidence and written and oral presentation skills are tested, given there is more stakeholder exposure.
What does the remuneration range look like for each of the levels?
ER – Broadly speaking and taking into account the types of equity research houses in Australia, boutiques to investment banks, the base salaries are as follows:
- Associate: $120k – $180k including super
- Senior Associate: $160k – $250k including super
- VP: $220k – $320k including super
- Analyst 1: $165k – 180k including super – 2023 graduate starting salary, plus bonus of circa $20k paid mid-year
- Analyst 2: $175k – 220k including super, plus bonus of circa 50%
- Analyst 3: $180k – 235k including super, plus bonus of 50-75%
- Associate 1: $230k – 260k including super
- Associate 1 bonus for 2022: $25k – $115k
- Associate 2: $250k – $310k including super
- Associate 2 bonus for 2022: $40k – $150k
- Associate 3: $265k – $340k including super
- Associate 3 bonus for 2022: $50k – $165k
- VP: $320k – $380k including super, with a bonus range of $75k to $265k
Where could your career branch out to?
ER – Equity research is an excellent industry to join as the skillset is transferrable to a variety of other roles. The first of course is to transition into the buy-side and rather than write research on the stocks, you will use those research skills to invest in the stocks on behalf of retail or institutional investors. Casually we call this transition, “putting your money where your mouth is”.
Equity research candidates can also move into corporate investor relations, which is an excellent stepping stone for transitioning into corporate strategy (as the modelling experience is transferable), which again opens up a great further career path within corporate Australia.
Should you be a valued contributor in an investment bank there is the ability to move from equity research into investment banking. Usually this is done after a few years in research as the more senior you become the harder it is to make the shift. Should you move into investment banking, this deal experience would make you more appealing for private market investors too, for example. It’s not always the case that you need to move into IB to transition into private markets, but the experience after equity research does help. It’s also a common pathway to move from equity research into equity sales.
IB – The two more oft travelled paths are into corporate mergers and acquisitions (M&A) or into private markets. Corporate roles may be in large, listed companies which typically have large teams or perhaps in smaller, private businesses which may or may not be private equity (PE) backed. The roles in corporate M&A are very similar to IB in terms of managing deals – however, the deal velocity is less as it is just as important not to do deals as to execute in the case that they are the wrong deals. The corporate teams are also often leaning on the banks so the hours and pressures can be less within corporate and this career pathway is often seen as a lifestyle option.
The options in private markets are venture capital, private equity, real assets, credit, family offices or super funds. These environments and roles all differ but the common thread is moving from sell-side to buy-side and learning to think like an investor. This role is also different to banking in that investee companies sit in a portfolio and will be actively managed during the investment lifecycle so candidates can get exposure to business operations.
How does an internship benefit me and what qualities do investment banks look for?
Ultimately an internship gives you profile alongside understanding of the role and environment of an investment bank. These are highly competitive and being awarded an internship is a great achievement. However, ultimately the investment bank is looking for an excellent work ethic, strong E.Q., excellent attention to detail, a great attitude to peers and the opportunity, and where you may fit into the organisation. If you are fortunate enough to be awarded an internship (because as mentioned, they are highly coveted), we believe investment banks are looking for attitude, passion, keenness and work ethic.
From the recruiter’s experience, what kind of candidates tend to succeed in getting in and thriving in these roles?
ER – Great equity research analysts have a trio of dominant skills. They are firstly excellent communicators (written and spoken). Secondly, they love companies and modelling those companies to highlight their view on whether the company is a buy, sell or a hold. Lastly, they love critical thinking – comparing the stocks under coverage and utilising their strategic mindset to undertake the research. All of the highest rated covering analysts are very good at the three keys skills and as such, do very well in the industry and are seen as trusted resources to the buy side which results in an excellent profile in the market.
IB – The skills sought certainly change throughout the levels. An Analyst needs to be very strong technically, an Associate need to start to step up to deal with stakeholders and manage junior workflow and a VP needs to be a project manager with very strong presentation, communication and higher levels of confidence. Work ethic is also paramount, as is attention to detail, maturity and an all-round great attitude!
Day in the Life of Investment Researchers > >