What is a Research Analyst
A research analyst is a person who prepares investigative reports on securities or assets for in-house or client use. Other names for this function include financial analyst, securities analyst, investment analyst, equity analyst, ratings analyst, or simply "analyst." The work conducted by the research analyst is in an effort to inquire, examine, find or revise facts, principles and theories for internal use by a financial institution or an external financial client. The report an analyst prepares entails the examination of public records of securities of companies or industries, and often concludes with a "buy," "sell" or "hold" recommendation.
If the research analyst is involved with an investment bank or a securities firm controlled by a member organization of the Financial Industry Regulatory Authority (FINRA), he or she may be required to register with a self-regulatory organization and/or take certain exams.
Breaking Down Research Analyst
Research analysts are usually divided into two groups: "buy-side" and "sell-side." A buy-side (brokerage) research analyst, employed by an asset management company, recommends securities for investment. The research of a sell-side (investment firm) analyst tends to be sold to the buy-side. Sell-side research is also given to clients for free for consideration, such as in an attempt to win business. Such research can be used to promote companies.
Buy-side research analysts are often considered more professional, academic and reputable compared to the sell-side. Sell-side research jobs, often likened to marketing, often pay higher salaries.
Who Employs Research Analysts?
Research analysts can work at a variety of companies, such as asset managers, investment banks, insurers, hedge funds, pension funds, brokerages or any business that needs to crunch data to spot trends or decide on a valuation, make an investment decision or forecast the outlook of a company or asset. According to the U.S. News Best Jobs report, the median salary for a research analyst in 2015 was $62,150, while the best-paid earned more than $120,000 and the lowest $33,530.
Research Analyst Qualifications
Companies that employ research analysts sometimes require a master's degree in finance or a Chartered Financial Analyst (CFA) designation on top of several regulatory hurdles. Research analysts might be required to take the Series 86/87 exam if they are involved with a member organization. Other securities licenses often required include the Series 7 general securities representative license and the Series 63 uniform securities agent license. FINRA licenses are typically associated with the selling of specific securities as a firm’s registered representative. Investment analysts may also seek to obtain the Chartered Financial Analyst (CFA) certification.