The role of a research analyst So what do research analysts actually do well, their primary role is to generate investment ideas these investment ideas help individuals that manage money. That's portfolio managers to make investment decisions. Let's explore the dynamics of the investment industry in a bit more detail to help us understand the role of research analysts it all starts off with investors. These investors have money to invest but don't have the time or the inclination to decide how to invest it. So they hand their money to investment managers. This money is referred to as assets under management or AUM. Now the act of managing money has many layers to it. First it involves determining the investment strategy of the fund. It also involves making the investment decisions and then executing those transactions to buy and sell the securities. And finally, it also involves monitoring the performance of the funds and reporting this performance to the investors. Now as you can probably tell these investment managers are busy people. So to reduce the burden of scouring the market for investment opportunities. They rely on buying investment ideas from research firms. These are either independent brokerage firms or the research arms of investment Banks. Now this act of buying research introduces a really important concept in research. That's the buy side and the cell side. The buy side are the investment management firms, which buy research ideas from the brokerages and investment banks. Whilst the cell side are the brokerages and an investment banks that sell the research ideas. The investment managers pay for these investment ideas, either through explicit fees or sometimes by the commissions that they pay when they execute trades. Under recent regulation in Europe, which is known as method European fund managers are required to pay an explicit fee for access to cell side research. Now one thing to add here is that there are actually research analysts on both the buy side and the sell side. Sell side analysts produce very detailed research and typically analyze only one sector or sub sector of the market and this allows them to know that sector in sufficient detail. By side analysts then use the sell-side research from a number of different firms and incorporate it into their own research and analysis. The buy side analysts will then make an investment recommendation to the portfolio manager who will then decide whether to execute a trade? Since buy-side analysts rely on sell-side research. They don't need to track companies in as much detail. So they will often analyze more than one sector or an entire industry.