What Do Investment Research Firms Do?
We have all heard the term investment research being thrown around, but what is it exactly that investment researchers do? We have broken down the various elements of what an investment researcher does, inclusive of a summary of investment research itself, as well as a synopsis of the roles an investment researcher must undertake on a daily business to have the best chances of succeeding.
What is Investment Research
Investment research is, simply put, work done to study the performances of stocks, mutual funds, and other elements of the business. Investment researchers are able to find market information in order to analyze and use their unique expertise in order to acquire data and the advice that comes with it. The aim of investment research is to remove any guesswork involved, allowing investors to make informed, profitable, and most of all efficient decisions.
Financial Analyst vs. Research Analyst: What’s The Difference?
A financial analyst is a form of a researcher who collects and organises market data. The key differences lie in the fact that financial analysts put their focus on the analysing of investments and market performance. To do this, they rely upon a thorough understanding of business assessment and economic principles. This in turn helps to generate reports, as well as allowing them to make informed recommendations. As “behind-the-scenes experts”, research analysts have a less strict role than financial analysts. Financial analysts collect and study data. Even so, this is always within the context of a former rational sense of insight into how markets should operate. This is known as a systemic approach. In contrast, research analysts often focus solely on an operative standpoint, always looking to maximise output on whatever criteria they are given.
Investment Researcher Roles
To work as an investment researcher, there are various skills that are essential for the job. This can include researching companies and making recommendations. Although this is a major part of the investment researcher role, there are many other important elements involved. Other responsibilities include:
Staying Up to Date With Current Events
An analyst must stay on top of any financial-based breaking news stories throughout their day. These can impact stock markets so must be closely watched.
A good investment researcher must stay in touch with colleagues. This includes preparing to answer any sales-based questions, giving information on particular stocks, and taking action appropriately.
An investment researcher must produce forecasts, estimating earnings for any of the companies that they oversee. This includes quarterly figures, in addition to following economic events and other news sources.
Keep in Touch With Company Management
As well as staying in constant contact with colleagues, when necessary, investment researchers must meet with the management departments of any of the companies that they cover. Although this can provide important inputs for investment researchers, you must be careful not to reveal any critical or private information. This could well impact the stock price of the company if it isn’t available to the public, giving an unfair advantage.