Even before we start, we need to clarify that the “associate” title is not a typo. In research, you start as an associate, and then if you’re good, you eventually get promoted to the analyst level. Why would anyone want to keep things standardized and simple, right?
Anyway, have you ever seen reports that suggest whether you should buy, sell, or hold a stock? Also, have you ever asked yourself where those reports come from? Well, this is what a typical researcher does in Investment Banking. They focus on a specific industry or a set of companies and they become an expert at it. The tricky part is that they have to know as much as possible without access to private information.
If you are interested in research, you should expect to construct financial models and write a lot. By working in research, you have to be on top of your industry. You have to understand everything that is going on and how it may affect whatever you’re following. If the company reports bad earnings, you have to be able to explain why that happened and what impact that might have in the future. Additionally, every morning around 7:00 am (depending on the bank), research employees get on the phone with sales and trading (S&T) people for a morning call. A morning call is an update on the most relevant news for the day, and a discussion about how this might impact a particular stock and the market as a whole.
Similar to an investment banking analyst, you can expect to do a plethora of financial models. You will keep readjusting them for new quarterly numbers and revise the estimates. If you’re lucky and end up working for a top analyst, you might get the chance to take calls from less important clients.
Being analytical, detail oriented, creative, and a good problem solver are the most important skills that describe a research associate. Of course, this list is not exhaustive. You also have to be very enthusiastic about your job, reliable, respectful, and hard-working. The main point is that you will spend a lot of time trying to figure out new and different things out of information that is available to everyone. Thus, you will have to be able to look for the smallest details that might make a difference and come up with new ways how to interpret them. In some sense, research people are also sales people. You have to be able to write your research in a way that will be appealing to your client so that he/she will keep buying it from you.
After working in this position for a period of time, you will not only enhance all the skills that you needed to get the job but also develop a strong sense for what is going on with the industry you’re following and what its drivers are. Additionally, you will learn finance inside and out. Reading financial statements and getting valuable information out of them will be your daily routine. All in all, as a research associate, you can expect to become an expert on an industry, and learn how to get the most out of all the public information that is available.
When you get hired as an associate, you can expect to work there for two to three years, and then come to the point where you either stay on board and get promoted, or go someplace else. You might go and get your MBA, or you might find a job at a private equity firm or a hedge fund. Again, just like with investment banking, there’s no typical career path. However, your expertise will be finance related so you can at least expect to stay in that field.
In terms of the office “feel,” research feels very similar to investment banking – you’ll most likely get your cubical and sit there crunching numbers and following the news. As far as hours go, you can expect to come early in the morning and leave late at night. However, hours probably won’t be as bad as your banker friends’ hours. To be more specific, you can expect to come to the office around 7:00 am, and leave around 10:00 pm. Spending time after midnight or pulling all-nighters are not impossible to happen, but are very rare (if they happen, it’s usually around the earnings season). Additionally, you can expect to work on weekends. They will be flexible, but you’ll still be working.
Since you’re going to be working around 70-80 hour weeks, don’t expect to have much life outside of work. The nice thing about research is that it is more predictable than a banking analyst position. So if you have something scheduled in your free time, there’s a good chance you’ll be able to make it.
Compensation for research associates is great. It is usually split in three buckets: signing bonus, base salary, and year-end bonus. To put it all in numbers terms, here’s what you can expect for your first year:
- Signing bonus: ~$10,000
- Base salary: ~$70,000 – $90,000
- Year-end bonus: ~$10,000 – $40,000
Although these are pretty fair ranges to assume, it is hard to generalize and encompass what every bank pays, so use this only as guidance.