Equity research is not a poorly paid job. According to equity research headhunters, managing director (MD)-level research professionals in ‘top tier’ banks can earn anything from £350k-£450k ($583k-$750k). Vice president (VP)-level equity researcher can earn anything from £100k to £150k ($166k to $250k). These are not people on the breadline.
And yet, equity research professionals have reason to feel peeved when they compare their compensation to colleagues working in sales and trading. “On average, researchers have always been paid less than people in trading and sales,” says Oliver Rolfe at search firm Spartan Partnership. “When it comes to who created the business, there has always been a difference of opinion between trading, sales and research.”
Research from Accenture, suggests that difference of opinion can be resolved. Equity researchers are pivotal. The time has come for them to receive a pay rise relative to their colleagues.
Accenture surveyed 100 clients of investment banks (50 institutional investors, 50 corporates, in the U.S. and the U.K.) and found that in the post-crisis trading world, research is key when they’re deciding which bank to place trades through. As the chart below shows, research comes second only to price.
Response to the question ‘What are the four most important factors influencing your choice of an investment bank for a product or service?’
Which kind of research do clients like most of all? Try broad industry insights.
Response to the question ‘Which aspects of the research undertaken by a bank do you find most valuable?’
Response to the question ‘What research would you ideally like to receive from an investment bank in future?’
And what would they like to see more of in future? Try ‘commercially applicable fresh insights’ or reports on broader macro-economic and industry-related themes.
If you work in equity research, you may want to put these charts before your boss. You may also want to start writing broad sector-focused reports and forget the statistical analysis.