A Step By Step Guide on How to Become an Equity Analyst

Equity analysts, also referred to as stock analysts, focus on stock markets and research how companies perform in the securities market. Moreover, equity analysts in corporate finance assess companies within their portfolios. Other roles of equity analysts include preparing reports and making recommendations to the management on which stocks to buy or sell.

Buy-side equity analysts

Buy-side equity analysts work for companies that purchase investment services and products, for example, hedge funds, private equity, trusts, pension funds, life insurance, and venture capital.

Buy-side research analysts research companies within their portfolios but focus on a broader area than sell-side research analysts. Therefore, they analyze reports and read the news to make the best recommendations to clients on financial products such as stocks.

Sell-side equity analysts

Sell-side stock analysts create services and products and avail them to the buy-side of the finance industry. Job designations in the sell-side financial industry include sell-side traders, researchers, and investment bankers.

Research analysts who work on the sell-side carry out a much more in-depth analysis of companies in specific industry sectors than buy-side research analysts. Consequently, they have a narrow focus and develop strong expertise, enabling them to prepare public reports with recommendations and expert opinions on financial estimates and predictions on future stock performance. As a result, buy-side research analysts rely on sell-side researchers for reliable information and expert reports. In addition, payment depends on the value of the information they provide.

How to become a stock analyst

There are no minimum education requirements to become a stock analyst. However, most employers require you to have a bachelor’s degree in finance or a related field.

Education

The first step is to earn a bachelor’s degree and major in finance, economics, accounting, and business administration. As a result, you will have a solid background for starting your career as an equity analyst. If you choose a major that is not business or finance-related, you can still stand if you can justify your choice and how the skills you learned will be applicable in a financial position.

Additionally, attaining a master’s in finance or MBA early in your career will get you closer to achieving a stock analyst position. Although you require several years of work experience to qualify for a master’s program, it would be a good idea to come up with a timeline to help you take the admission tests and obtain the required materials.

Financial internship

If you are building a career in finance, it is critical to complete a finance internship. A financial internship will give you information about investments and prepare you for the day-to-day activities of an equity analyst. Additionally, you will form professional networks and develop relationships with employers and colleagues who can mentor you or act as your referees.

As a result, you will gain real-world experience in the finance industry and explore potential roles in the future, including equity analyst positions. In addition, having completed a financial internship will make it easier to find employment after completing your studies. You can research companies in your area that offer financial internships and apply.

Attain a FINRA Series 7 license

The FINRA Series 7 license, offered by the Financial Industry Regulatory Authority, regulates member investment companies and stock exchange markets, is also referred to as the General Securities Registered Representative license.

Earning the Series 7 license allows you to undertake trading in exchange markets such as selling municipal and corporate bonds and stocks, valuable annuities, mutual funds, mortgage obligations with collateral, and direct participation programs, among others.

Although there are no pre-requisite work or degree requirements to qualify for the Series 7 license, most candidates are in college or have a college degree with a major in finance. To earn the license, you should secure sponsorship and work for four months in a firm that is a registered member of FINRA. At the end of the four months, the firm should register you for the exam by sending a special application (Form U4).

Attain a CFA certification

You can give yourself an edge and stand out as a financial analyst by attaining a CFA certification. The CFA Institute offers chartered financial analyst (CFA) accreditation. The charter is for investment and financial professionals, and its curriculum covers topics in investment and finance.

Additionally, the curriculum covers portfolio management, financial analysis, derivatives, stocks, bonds, and ethics. The course is offered internationally and recognized as the gold standard for all financial analysts.

Although the CFA course is challenging, you can get help by enrolling to study packages from Analystprep.com. We will provide you with 24-hour study support, instruction from our experts, and supplemental study materials including, online study notes and video lessons, question banks, mock examinations, and customizable quizzes. You will have the most reliable partner on your journey to becoming a successful CFA charter holder.