Research Analyst career Options: What is the Difference between Buy Side and Sell Side?

Research analyst designations in the investment industry have roles that can vary considerably. The main difference in research analyst career positions is whether it is on the buy-side or sell-side. However, although both sides require you to research different firms and industries, each requires different research and advancement paths.

As a buy-side research analyst, you will work for companies that buy assets and securities for clients intending to manage their money. On the other hand, sell-side analysts sell financial products, including stocks, bonds, and trade in foreign exchange on behalf of their clients. Let us look at other differences between buy-side and sell-side research analysts.

Sell-side research analysts

Sell-side research analysts and companies create services and products and avail them to the buy-side of the finance industry. Job designations in the financial sell-side sector include sell-side traders, researchers, and investment bankers.

Research analysts who work on the sell-side carry out a much more in-depth analysis of companies in specific industry sectors than buy-side research analysts. They narrow focus and develop strong expertise to prepare public reports with recommendations and expert opinions. As a result, buy-side research analysts rely on sell-side researchers for reliable information and expert reports. In addition, the compensation depends on the value of the information they provide.

Buy-side research analysts

Buy-side researchers work for companies that purchase investment services and products—for example, hedge funds, private equity, trusts, pension funds, life insurance, and venture capital.

Buy-side research analysts research companies in specific financial industry sectors but focus on a broader area than sell-side research analysts. Therefore, they analyze reports and read the news to make the best recommendations to clients on financial products such as stocks. As a result, payment depends on the value of investment recommendations they make.

How to choose between buy-side and sell-side research careers

If you want a career as a research analyst, it is essential to understand the differences between buy-side and sell-side designations. The right choice will depend on your objectives and goals in a job.

Job responsibilities

Entry-level job tasks are similar for both buy-side and sell-side research analyst careers, but specialized roles occur as you move up in your career. Job tasks on the sell-side heavily focus on financial modeling, analysis, and preparation of investment opinions and public reports. On the other hand, buy-side job tasks greatly depend on the specific designations. For example, investment bankers help businesses merge or buy new acquisitions.

Individual recognition at the workplace

At the beginning stages of your career, it is easier to get recognition at work if you are on the sell-side than on the buy-side. You can get your name on public research reports and expert opinion statements distributed to clients and media. Additionally, you have an opportunity to become a sought-after expert by the media in your chosen niche.

If you choose to work on the buy-side, you have little opportunity to be recognized at the initial stages of your career. However, you can gain recognition if you work on large deals that attract media attention.

Opportunities for career advancement

If you seek a long-term career with opportunities for advancement, buy-side careers have a clearer path with approximate time frames. Your career path starts as an analyst, progresses to associate after two to three years, and advances to higher positions such as director or VP after three or more years.

As a sell-side research analyst, you have opportunities to progress in your career from associate, analyst, senior analyst to research director. However, your career path and timeline are less clear, and it is more challenging to advance in your career because sell-side analysts do not manage relationships with clients or make deals like buy-side analysts.

Work-life balance

A career as a research analyst requires you to put in long hours and work hard. However, if the work-life balance is important to you, it would be best to consider a sell-side career. A common reason individuals with careers on the buy-side change careers is burnout which mot the case for professionals on the sell-side report.

In conclusion, there are benefits and challenges in both sell-side and buy-side research analyst careers. The choice will depend on what is important to you and your long-term career goals. However, whether you go for a sell-side or buy-side career, earning a CFA Charter will set you apart and help you advance your career.

With a CFA designation, you will focus on understanding financial markets, analyzing various businesses, and advising companies and individuals to invest. As a result, achieving a CFA designation will help you become an investment analyst, fund manager, portfolio manager, and financial advisor.

Start your journey to CFA certification with Analystprep.com and enroll in our study packages. We provide instruction from our experts and supplemental study materials including, online study notes and video lessons, question banks, mock examinations, and customizable quizzes.