After a news event or nationwide announcement, it's the research analyst's phone that's incessantly ringing with callers seeking advice on reactionary next moves. In investment banking, solid market research is important to build trust among those with brokerage accounts and to confidently advise clients whether to purchase a given stock. Analysts are largely in the banks' hot seat and are responsible for -- among other duties -- earnings estimates and their accuracy, while associates support the analysts. Serving as a go-between that interacts directly with companies while also reading reports and following developments, research analysts advise salesmen and traders on stock market moves.
Specializing in economics, accounting or equities as well as finance, these professionals are a combination of financial analyst and statistician. The job involves constant number crunching and deadline meeting. An associate reports to one analyst and routinely prepares analyses and research on financial and economic matters. Associates typically target one industry and follow it closely to gain in-depth understanding. Spending long, tedious hours at the office, as well as working over weekends is the norm for associates. Their research could involve studying best practice policies and mechanisms at local, federal and state levels that might promote financing investments in commercial, manufacturing, nonprofit and residential sectors. Associates tend to be recent undergrads from top-tier universities or recent business school grads with newly minted MBAs.
These pros are the masters on the research playing field. Above all, they've got to get the numbers right. Inaccurate earnings estimates reflect poorly on analysts. The career path to becoming an analyst usually involves starting as an assistant, becoming an associate and later an analyst. Or you could start as an associate and advance to become an analyst. Some analysts landed their gigs with industry experience and classically moved up the job ranks. An analyst is charged with managing relationships with big-gun, VIP clients and salespeople, as well as writing investigative reports (or the writing may be delegated to trusted associates). Their reports scrutinize the equity securities of industries or companies. Sales skills are essential, because analysts recommend which stocks to buy and sell.
While they still clock many hours, compared to analysts, associates typically leave the office at a more reasonable hour and work less on weekends. Associates are expected to be at the office very early every day to attend morning meetings. An analyst may have to complete certain exams if the position she holds is with a securities firm or investment bank controlled by a Financial Industry Regulatory Authority (FINRA) member organization.
While compensation packages vary, a typical Wall Street research associate and recent college graduate usually earns about $40,000 in annual salary plus $10,000 or $15,000 as a bonus, according to Vault.com. New research associates that are business school grads will earn about $75,000, with about a $25,000 signing bonus and $25,000 year-end bonus. After a few years, the salary will increase. How much depends on individual performance as evaluated by superiors, stock performance and other factors. An analyst is more a team lead, so she earns more. Packages vary widely depending on the analyst rating, market performance and industries covered. Recent MBA grads that start out as analysts still tend to receive the typical package received by corporate finance associates, notes Vault.com.
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