The Changing Career Outlook For Equity Research Analysts

Considering a career as an equity research analyst? Some recent trends will affect your future. Michael Mayhew, CEO Integrity Research Associates, discussed them in his presentation on "The Outlook for the Equity Research Industry," a presentation to the Boston Security Analysts Society on January 13, 2006.

Equity research is in the midst of a sea change in the wake of New York Attorney General Elliot Spitzer’s high-profile cases against biased research. As a result, the number, experience and compensation of sell-side (traditional Wall Street) analysts are declining. The reverse is true for buy-side analysts -- those employed by asset management firms. The trend for analysts at independent research firms, which historically haven’t paid well, is close to flat.

Today, buy-side firms are looking for analysts who "can produce research from the ground up," said Mayhew. However, there’s a significant difference between these new buy-side analysts and the old sell-side analysts. Writing regular research reports for marketing purposes is not part of the buy-side job. Accordingly, the new buy-side analysts can cover 50 companies vs. the 10 per old-fashioned sell-side analyst. As a result, overall employment for research analysts is likely to decline.

Got questions? Contact Michael Mayhew at Michael.Mayhew@Integrity-research.com. You can also visit the firm’s Equity Research News blog (www.integrityresearch.blogdrive.com).

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Susan Weiner, CFA saves time for busy investment professionals by helping them to author articles, white papers, sales presentations and other publications. Contact her at susan@investmentwriting.com or read her blog at www.SusanCFA.blogspot.com.