Financial services is a huge industry. There are a variety of different types of financial services, and those working in financial services perform a variety of tasks. Financial services workers include financial planners, bankers, financial advisors, and other key financial figures. Some also work in related fields, such as insurance, real estate, and law. They have a variety of duties that vary based on the sector they work in.
While most people associate investment banking with deal-making, they have an important research component as well. Investment bankers conduct research to evaluate companies to make sound recommendations to their clients. Their research focuses on a company’s financials, including its financial statements, operating performance, risks, and growth prospects. They also examine a company’s competitive position, management, industry, and economic conditions. Broker dealers, which serve as an intermediary between investment bankers and their clients, also perform research for clients.
What is Investment Banking?
Investment Banking is an important component of the financial services industry. Traditionally, investment banks include large and commercial banks, acting individually and as banks of issue. They engage in a variety of investment banking activities, including underwriting public and private offerings of securities, advising companies on mergers or acquisitions, and trading in securities.
An investment banking job is a unique career path. It requires you to have a knack for handling large sums of money and working with complicated financial terms and concepts. Successful investment bankers manage investments like stocks, bonds, hedge funds, and private equity. They analyze individual companies and sectors and recommend investment strategies to wealthy individuals, companies, and other investment firms.
Investment banks make and service stocks and bonds for corporations, governments, and individuals. They also underwrite new issues of securities and handle mergers and other financial transactions. These banks focus on creating shareholder value and making a profit for investors, supplying capital to corporations.
Benefits of Investment Banking
There are many motivations why someone chooses to pursue a career in investment banking. Despite the seemingly lucrative pay, most investment bankers gravitate toward the field because of the challenging and intellectually stimulating work. Investment banking involves analyzing and solving both quantitative and qualitative problems. The finance industry thrives on intellectual stimulation and problem-solving, making investment banking so exciting. This list highlights some benefits of being a career banker rather than living in other financial professions.
What is Equity Research?
Equity Research is the practice of researching and evaluating companies’ and industries’ performance, including their level of commitment to social responsibility, based on objective measures. Corporations are encouraged to disclose information about their sustainability practices, including how they treat the workers that work for them. Also known as investment analysis; equity research strives to find and value securities that present an investment opportunity. Conducting this research thoroughly can be extremely crucial, to avoid chances of investment or securities fraud. Investment analysts in equity research focus on analyzing securities, screening, and selecting companies, and writing reports.
Fundamental Principle of Equity Research
The most fundamental principle of equity research is that investors in stock are entitled to the same information as everyone else. Yet, in practice, research analysts’ reports often contain predictions of growth and earnings that are not entirely transparent to the average investor. At times, analysts make projections about a company’s performance based on assumptions drawn from personal experience.
The Goal of Equity Research
Although equity research has a bad rap, it is a vital investment process. The goal is to understand the value and prospects of companies. An equity research firm employs analysts who evaluate companies and the industries in which they operate. Analysts compile information about a corporation’s financial performance, prospects, and other important data to help investors decide whether to invest in a particular company.
Benefits of Equity Research
The equity research industry has grown dramatically over the past two decades, creating tremendous demand for qualified research and investment professionals. Yet, despite the industry’s rapid growth, many students pursuing careers don’t know enough about the ethics and potential conflicts of interest that can arise in the industry. But by understanding what equity research is, how it impacts financial markets, and the ethical and regulatory framework that governs the industry, a future equity researcher can weigh the costs and benefits of pursuing this experience.
Companies need both. They need investment banking for their IPOs and secondary offers, and they need equity research for macro and long-term analyses. Both are tools that complement the capital-raising process.
Investment banking is best known to the general public for its famous bankers, who have appeared in movies and TV for decades. However, it is also an important source of income for investment advisory firms, which focus on managing client portfolios and generating profits for shareholders. On the other hand, equity research is an area of the financial services industry that deals with analyzing companies, stocks, and securities.