What Is a Research Associate?
A research associate typically works within a research department of an investment bank or asset management firm to provide helpful data to the decision-makers who buy and sell securities for the firm. A research associate can plan, organize, and conduct research about industries, sectors, individual companies, markets, various investment vehicles, and economics.
- A research associate works in a research department of an investment bank, asset management firm, or other financial services company to gather, organize, and synthesize data to support decision-makers in the firm's sales and trading function.
- An individual who works as a research associate can become an expert in specific areas or be utilized as a generalist to cover a broad range of products, markets, and industries.
- A research associate can climb vertically toward becoming a senior analyst or research director, or they may move laterally inside or outside an organization.
Understanding the Role of Investment Research
Most large investment banks have in-house research departments that support their sales and trading efforts. A sell-side firm may have several research groups according to the company's different investment products—for example, stocks, corporate bonds, derivatives, and so on. A firm's research professionals provide critical decision-making information to its salesmen and traders that substantiate the financial products they sell to institutional investors. A firm's research often provides specific buy, sell, and hold recommendations along with their rationale.
A key product of a research department is its written research; whether that takes the form of scrawled notes to the trading desk or a formal published research report, along with appropriate financial models, that goes out to the buy-side. Usually, it's a combination of both and each format plays a specific role in providing time-sensitive analysis that supports decision-making.
What Does A Research Associate Do?
A research associate's responsibilities can vary depending on the size and needs of the organization. The end purpose of the job, however, is to provide helpful information to the decision-makers. A research associate could gather data from primary and secondary sources; organize and analyze this material, and draft outlines for their superiors. If an equity research associate has had at least one year of experience at the firm, they might begin to conduct fundamental company analysis with the goal of generating actionable information from the data. A research associate can become an expert in specific areas or be utilized as a generalist to cover a broad range of products, markets, and industries.
A firm's research department provides critical time-sensitive analyses of companies, industries, markets, asset classes, and economics to decision-makers and traders on both the buy- and sell-sides.
Job Skills and Requirements
Because the end product of a research department is written research, it's critical that a research associate be able to write well. The role usually requires a bachelor's or master's degree in economics, business or finance; facility with numbers, and the ability to distill large amounts of data and communicate it effectively to others. Other skills would come into play as the individual advances in the role of research associate. For example, if they end up attending client meetings, they might need good listening, notetaking, and intersocial abilities. If they travel for pre-initial public offering (IPO) roadshows, they would need good presentation and sales skills, and so on.
Career Path of a Research Associate
Depending on an organization's hierarchical structure, a research associate can be at the same level as a research assistant or above it, and at the same level or below a research analyst. The research associate generally spends at least two years at that level before moving up the ladder, whether to a senior research associate role or research analyst position (most organizations place the analyst position above the associate position).
By accumulating more experience, a research associate can climb vertically toward becoming a senior analyst or research director; or they may move laterally inside or outside an organization. Inside the company, for example, a seasoned research professional who does not aspire to become head of research could move to a product group in a marketing role, or to a different part of the firm altogether. It's also not unheard of for a research associate to decide that they prefer trading instead of research. In the case of a research associate on the sell-side, a career jump to the buy-side as an analyst also could offer potential advancement.