Equity researchers suffering in "car crash" job market
Life as an equity researcher has been challenging for a while. Ever since MiFID II was introduced in Europe five years ago, researchers have had to justify their existence by selling research on its own merits rather than including it in a bundle of trade execution products. Hours are long and pay is (comparatively) low in research as a result - our compensation survey last year found that researchers were earning half the amount of salespeople and traders on average, even while they worked longer hours.
If things were bad for equity researchers last year, though, they've recently got a lot worse. In retrospect, 2021 and early 2022 were good years for equity research jobs as investors clamoured for content to make sense of the pandemic. But that all changed as the year went on.
"Demand for equity researchers has been hit hard by the decline in IPOs," says Zaki Ahmed at research-focused headhunting firm Financial Search Limited. "It's a huge change from the boom that came after the pandemic. - When the pandemic started, the equity research hiring market was dead for two or three months, but it boomed from June 2020. Analysts were suddenly in vogue and there was a wave of optimism until the final quarter of last year, when hiring quietened down a lot."
Quieter hiring is one thing, but another headhunter points out that this isn't the only issue - equity researchers have also been losing their jobs. They were hit disproportionately by pre-Christmas cuts at Berenberg and Credit Suisse and the market is now awash with people looking for new roles.
"It's not easy finding a new job when you've had these two car crashes at Credit Suisse and Berenberg and there are so many people on the market," says one London research headhunter. "There is still some hiring, but not all of these people are going to find new jobs."
Equity researchers who are still employed are more fortunate, but have their own issues in the form of falling bonuses. - With equity capital market (ECM) revenues at many banks down 75%+ in 2022, research pay has plummeted. At Berenberg, bonuses have been cut to almost nothing at all.
"Senior people are taking the pay hit," says the headhunter. "Equity researchers got decent bonuses in 2021, but for 2022 they are down a lot," says Ahmed. "There are a lot of candidates on the market and not enough homes for them to go to. But it will pick up - these things are cyclical," he adds.
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