Research Note

What Is a Research Note?

A research note is a statement from a brokerage firm or other investment advisory service discussing specific security, industry, market, or news item. Research notes are usually meant to contain time-sensitive information that applies to the current day's trading session or some event in the near future.

Research notes are useful tools for investors but entities sharing them must be careful how they are utilized in order to prevent market manipulation or bias.

Key Takeaways

  • A research note usually contains time-sensitive information that is released via a statement from an investment advisory or brokerage firm, and should not be confused for academic or scientific publications.
  • Research notes often apply to the current day's trading event or an event in the near future.
  • Research notes can be pertinent to the news, industry, market, or specific security.
  • In the past, research notes were physical pieces of paper. Now, they can be passed along via blogs, commentators, and electronic sources.
  • Entities supplying research notes to clients should be careful not to disadvantage any one class of investors at the expense of another group.

How Research Notes Work

Research notes are often short in length (only a few paragraphs is common) and may make reference to an existing and more thorough investment call to buy or sell a security. Research notes are also often used to advise clients to change their tactics and take a different course of action, along with the firm's reasons for this advice.

Depending on the issuing firm, research notes may only be released to existing or prospective clients, and not to the general public. Many of them make their way into the public domain quickly, even later in the same trading day.

Research notes often toe a thin line between genuine security research and that of marketing materials. Although they are generally intended to educate investors, because there is no standard definition in place, it can be hard to separate good advice from a sales tactic, at times.

Research notes can have several other names. Often they may be called a flash report or desk report. Different names come and go out of style.

Special Considerations

The proliferation of electronic sources, blogs, and commentators has further added to the deluge in financial information sharing. Entities supplying research notes to clients can be careful not to disadvantage certain classes of investors at the expense of another group.

For instance, although not clearly illegal, it may not look good to pass select information to your best customers before others. It would be nearly impossible to share every piece of financial information with all investors at the same time.

In this instance, financial companies will offer the structure of a tiered service so investors can select the level of services that best meet their needs. Long-term investors do not need or request information daily; while more active investors will prefer to pay higher fees for greater access.

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