Career Planner: Financial Industry

The Basics
Self-Reflection
Job Profiles – Management
Job Profiles – Sales Department
Job Profiles – Research Department
Job Profiles – Trading Department
Job Profiles – Underwriting Department
Selection
Training Directory

RESEARCH DEPARTMENT:

In many investment-banking firms, this department maybe divided into retail and institutional sections to serve each type of client better. The institutional side offers help to the institutional sales representatives to make investment proposals and strategic plans of managing portfolios. They also provide research information to the underwriting department involving new issues of securities, mergers and acquisitions. The retail side provides information and answers to questions about different companies and their securities from the retail sales department. They give detailed insights and advice to the retail sales representatives to evaluate and make proposals for their clients.

This department usually consist of a handful of economists and technical analysts and several research analysts in a large investment-banking firm. Each research analyst will be assigned to a particular industry. Each will study the current operations and future prospects of the companies and perform comparative analysis with current and future economic and industry trends. The main duty of these analysts is to provide research reports with recommended investments, where they offer extensive analytical coverage for the institutional salespeople and short summaries for the retail sales side.

This department overview will be divided into the two most common research disciplines: technical and fundamental research.

COMMON TITLES

Technical/Quantitative Research:

Technical Research Analyst, Quantitative Analyst

Fundamental Research:

Equity Research Analyst, Fundamental Research Analyst, Equity Researcher

GENERAL ACCOUNTABILITIES & DUTIES

General:

The following are essential for research analyst in general:

*Perform research and analyze company and industry information for prospective purchase, asset allocation, fee generation or other cash flow, using typically industry/company standard analytical tools or measures

*Provide investment recommendations based on company and industry outlook and valuation modeling to the portfolio management division

*Design and manage financial and valuation models to generate financial forecasts for revenue and income forecasts

*Contribute analyses to report being prepared for other business units of the firm to aid in making financial, client, acquisition, or other business decision

*Generate detailed research reports for specific companies and industry trends in the coverage sub*sectors

*Assist with writing quarterly and annual portfolio performance commentaries

Technical/Quantitative Research:

*Perform quantitative/statistical analysis of macroeconomic and microeconomic variables that impact the industry.

*Conduct analysis of marketing and behavioural factors from both a univariate and multivariate prospective.

*Utilize technical research data to build forecasting statistical models

*Extract and process large quantities of data from various databases and other data sources in support of analytic assignments.

*Assist in developing, implementing, and enhancing quantitative portfolio models and strategies.

Fundamental Research:

*Conduct fundamental analysis of individual companies to evaluate quality of company management, financial performance and competitive position within an industry

*Review business and trade publications, annual reports, financial filings and other sources in order to gather, synthesize and interpret data on companies

*Determine the quality of financial statement information and analyze potential responses to scenarios of simulation from sensitivity analysis

*Determine a company’s future performance, with respect to: sales and profit, costs, profit margins, future cash flows, rates of return on capital and asset utilization; based on varying assumptions and projected market or economic conditions

*Utilize financial statements analysis data to build forecasting financial models

*Monitor and analyze economic and market data, industry trends, and security characteristics to support investment decisions.

KEY SKILL REQUIREMENTS

General:

The following are essential for research analyst in general:

*Strong analytical and quantitative skills along with advanced modeling experience, and a willingness to leverage technology and systems.

*Ensure integrity of analyses through rigorous attention to detail and validation of data.

*Capacity to quickly digest substantial volumes of information.

*Identifying relationships to draw logical conclusions and interpret results for use in decision*making.

*Demonstrate independent, creative, and strategic thought on investment issues and generate investment recommendations

*Competency in dissecting and valuing both mature and hyper*growth business models

*Understanding of corporate governance issues, corporate transactions and capital markets;

*Experienced in access and use of public information and proficiency with multiple proprietary third*party tools and databases

*Ability to write analytical commentary based on financial analysis and take a stance on buy/hold/sell positions

*Proficient with the use of Bloomberg and Reuters market data information systems

Technical/Quantitative Research:

*Solid understanding of time-series analysis and econometrics

*Strong quantitative and programming abilities, such as: programming skills (C++, C#, VB), statistical packages (R, SAS, Matlab, S*Plus), optimization and risk modeling (APT, Barra, Northfield, Axioma), databases (database design, SQL), financial packages (Market QA, FactSet)

Fundamental Research:

* Experienced and Skilled in rigorous financial statement analysis

ESTIMATED RANGE OF SALARY

*Research analysts are paid a fixed salary ranging from $80,000 to over $100,000 annually with bonuses. Technical and Quantitative analysts generally receive notably higher salary levels than fundamental research analysts.

EDUCATION, CERTIFICATION & LICENSES

Fundamental Research:

*A bachelors degree in Finance, Accounting, Economics or related field of studies is required

*Designations of Chartered Accountant (CA) and Chartered Financial Analyst (CFA) are highly desirable and required in some cases

*Master of Business Administration (MBA), or Master of Economics, Master of Finance, are highly desirable and required especially for senior positions

Technical/Quantitative Research:

*The Chartered Market Technician (CMT) designation is highly preferred

*Having the Chartered Financial Analyst (CFA) designation is an asset

*A bachelors degree in quantitative fields such as statistics, engineering, mathematics, computer science, economics, or finance is a must. A Master degree in these disciplines is often required for senior positions.