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The recent rise in equity prices isn't translating to any kind of hiring surge, particularly in investment research. Yet, observers say jobs exist - they simply reside in new places. For instance, research positions can be found within a growing number of boutique and research-only firms, led by a wave of companies seeking to position themselves among the next big players.

While many jobs lost on the sell-side may never return, Jim Janesky, managing director at St. Louis-based Stifel Nicolaus, says new slots are being created by growth in the middle-market and among firms that strictly produce research. Stifel Nicolaus, for example, has grown from 40 to 60 analysts since 2005. And boutique firms such as Argus Research and Integrity Research Associates, run by former Wall Street sell side analysts, are becoming increasingly relevant.

However, Janesky points out, the job of delivering research has become more difficult. "Its more challenging to come up with value-added research, whether it's producing statistics, talking to competitors, talking to customers," he says. "The industry has grown more competitive, and it's tougher to get into the business unless you have experience."

Gary Goldstein, president of the Whitney Group, says there's been an uptick in hiring in equity research lately as firms scramble to land top talent. He sees a vacuum in an industry once occupied by the likes of Alex Brown and Hambrecht & Quist. Large cap firms, trying to fill the void left by Lehman Brothers and Bear Stearns, are scooping up analysts. As many as 10-15 firms bear watching, Goldstein says, including Broadpoint Gleacher, Stifel Nicolaus, Piper Jaffray, Friedman, Billings, Ramsey Group, and Imperial Capital.

Among the areas in research drawing the most attention are health care, energy, real estate, technology and financial services. Similarly, green industries - ranging from energy to technologies - will remain active. One company worth watching: Well Fargo. Following its acquisition of Wachovia, the bank could play a bigger role in research.

Slow Going in Compensation

Despite the activity in the job market, analysts shouldn't expect to reap million-dollar compensation packages any time soon. Deal flow from mergers and acquisitions and underwriting, bell weathers for industry profits, remains low.

On top of that, compensation will continue to be a political football. In today's market compensation package could be composed of several components, beyond simply cash and bonuses. It may include stock options vesting over several years or loan pay backs, providing banks with some semblance of security and flexibility should market conditions worsen.

While the current economic downturn won't last forever, the challenges of recovery are far-reaching and not limited to a single sector. As a result, says Janesky, it could take longer than two or three years for the research sector to completely bounce back.