A Research Associate typically operates within the research division of an investment bank or an asset management firm, contributing valuable data to aid decision-makers who trade securities for the company. A Research Associate has a multifaceted role, planning, organizing, and executing research on industries, sectors, companies, markets, different investment vehicles, and broader economic trends.
Key Takeaways
- A Research Associate works in the research department of an investment bank, asset management firm, or other financial institutions to compile, organize, and interpret data to support decision-makers in the firm’s sales and trading divisions.
- Specialists or generalists, Research Associates can become experts in specific areas or cover a broad range of products, markets, and industries.
- Career progression for Research Associates can lead to senior analyst roles, research director positions, or lateral moves within or outside the organization.
Understanding the Role of Investment Research
Most prominent investment banks maintain in-house research teams to bolster their sales and trading activities. These sell-side firms often organize their research departments based on various investment products, including stocks, corporate bonds, and derivatives.
The essential function of a research team is to deliver actionable insights to the firm’s sales staff and traders, facilitating informed decisions that back the financial products sold to institutional investors. This research typically entails forming solid recommendations—be it buy, sell, or hold—accompanied by thorough rationale.
A core output from the research department consists of detailed written reports. These can vary from quick notes directed to the trading desk to comprehensive published reports replete with sophisticated financial models meant for the buy-side. This dual approach ensures timely analyses and informed decision-making.
What Does a Research Associate Do?
The role of a Research Associate varies depending on the size and requirements of the organization. Their primary mission remains consistent: offering valuable insights to decision-makers. They are responsible for gathering data from both primary and secondary sources, organizing and analyzing this data, and preparing outlines for their supervisors.
With enough experience, an equity research associate may undertake fundamental company analysis to draw actionable insights from this data. Specialization in specific sectors or a broad approach covering an array of products, markets, and industries is equally possible for them.
Research departments furnish critical, timely analysis on companies, industries, markets, asset classes, and economic conditions, aiding traders and decision-makers from both buy- and sell-side firms.
Job Skills and Requirements
Given that research outputs are typically written, proficient writing skills are crucial for a Research Associate. Academic qualifications generally include a bachelor’s or master’s degree in economics, business, or finance. An aptitude for numbers and the ability to synthesize vast data sets into coherent summaries are also vital.
As they progress, additional skills become important. For instance, attending client meetings may require strong communication, notetaking, and interpersonal skills. For those involved in pre-IPO roadshows, adeptness at presentations and sales is similarly critical.
Career Path of a Research Associate
The position of a Research Associate may rank equivalently or slightly above a research assistant but below a Research Analyst. It usually takes about two years for a Research Associate to advance either vertically to a Senior Research Associate or Research Analyst role. In many firms, the analyst position carries more weight than the associate role.
With accrued experience, Research Associates can aspire to become senior analysts or research directors. Alternatively, they might transfer laterally within or outside the organization. For instance, seasoned professionals may transition to marketing roles within product groups or explore entirely different company sectors.
Notably, some Research Associates realize a preference for trading over research and make the switch. Specifically, those on the sell-side could transition to the buy-side as analyst roles, presenting varied opportunities for career advancement.
Related Terms: investment bank, sell-side, trader, buy-side analyst, IPO, equity market.
