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To become a research analyst, one must complete multiple layers of education and gain industry experience. There are different types of research analysts, including buy-side and sell-side analysts, who focus on equity or debt capital markets. Certification is also required to advance in the field.
Institutional and retail investors often look to the research analyst community for advice to support investment decisions. To become a research analyst, an individual must complete multiple layers of education, including undergraduate and graduate accomplishments, and gain industry experience. An individual must also maintain a certification level on the way to becoming a research analyst.
There are different types of research analysts in the financial community, and eventually you will need to decide which type is right for you. Buy-side and sell-side analysts are two of the most common types of professionals. A sales analyst is responsible for providing in-depth research to other professionals at a financial services firm, including an independent brokerage or at a large financial institution that has brokerage capabilities. Sometimes a sales analyst also includes customers for that company in the survey distribution.
Pursuing a career as a buy-side analyst is another option you might consider. Unlike the sell-side professional, this analyst is employed by an institutional investor, such as a pension fund or hedge fund, and prepares research for the firm’s cash managers. The research is designed to support the company’s investment decisions that will have a domino effect on the portfolio performance of other investors, large and small, who have exposure to this fund.
Another choice you will have to make on the path to becoming a research analyst is to focus on equity or debt capital markets. The first is where capital is issued and shares are traded. Debt markets are where bonds are issued and traded. You will have to draw conclusions about an entity’s financial health based on the level of equity and debt on a balance sheet.
In terms of education, an individual who wants to become a research analyst must obtain an undergraduate degree in finance or a related course such as accounting or economics. In addition, you may need to obtain a Master of Business Administration in Finance. To become a research analyst, you must have a command of accounting and economics, as the profession requires sifting through sometimes complex financial statements. It is also important to be able to make decisions about investment potential in a region, corporation, or federal or local government.
Some certification will likely be required to advance as an analyst. It is possible for an employer to sponsor an employee’s training to become a certified professional analyst. Additional licensure may be required after several years of experience, such as a Chartered Financial Analyst Institute certification in the US.
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