What Is a Research Associate?
Let me tell you directly: a research associate typically operates in the research department of an investment bank or asset management firm, delivering essential data to those who make buy and sell decisions on securities for the firm. You should know they plan, organize, and conduct research on industries, sectors, individual companies, markets, various investment vehicles, and economics.
Key Takeaways
- 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 maintain in-house research departments that back their sales and trading operations. A sell-side firm might have multiple research groups based on different investment products, such as stocks, corporate bonds, or derivatives.
The research professionals in a firm supply critical information to salesmen and traders, justifying the financial products sold to institutional investors. This research often includes specific buy, sell, and hold recommendations with their underlying rationale.
The primary output from a research department is written research, which could be quick notes to the trading desk or formal published reports with financial models sent to the buy-side. It's usually a mix, and each format delivers time-sensitive analysis to aid decision-making.
What Does a Research Associate Do?
Your responsibilities as a research associate can differ based on the organization's size and needs, but the core goal is to deliver useful information to decision-makers. You might collect data from primary and secondary sources, organize and analyze it, and prepare outlines for superiors.
If you've got at least a year of experience as an equity research associate, you could start performing fundamental company analysis to produce actionable insights from the data. You can specialize in certain areas or serve as a generalist handling a wide array of products, markets, and industries.
Important note: a firm's research department delivers 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
Since the research department's output is written research, you need to be able to write effectively as a research associate. The role generally requires a bachelor's or master's degree in economics, business, or finance, plus strong numerical skills and the ability to process large data sets and communicate findings clearly.
As you progress, other skills become relevant. For instance, if you attend client meetings, you'll need solid listening, note-taking, and interpersonal abilities. If you handle pre-IPO roadshows with travel, presentation and sales skills will be essential.
Career Path of a Research Associate
In an organization's structure, a research associate might rank at the same level as a research assistant or above it, and equivalent to or below a research analyst. You typically spend at least two years in this role before advancing, perhaps to senior research associate or research analyst (analyst is usually higher than associate).
With more experience, you can advance vertically to senior analyst or research director, or shift laterally within or outside the organization. Inside the firm, a experienced researcher not aiming for head of research might move to a product group in marketing or another department entirely.
It's also common for a research associate to switch to trading if they prefer it over research. On the sell-side, jumping to the buy-side as an analyst can provide advancement opportunities.
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