Sell-Side vs. Buy-Side Analysts: Understanding the Differences

Both sell-side and buy-side analysts play an important role in the stock market. Here are the basics of sell-side and buy-side analysts and what the difference between them is.

Sell-Side Analysts

This type of analyst is employed by a brokerage or investment firm. This analyst will look at many different stocks and come up with recommendations about them. For example, they will commonly issue statements such as "buy," "sell" or "strong buy." These recommendations are for the general investor with a brokerage firm.

Buy-Side Analysts

This type of analyst works for a company such as a mutual fund or pension firm. They also analyze a number of different stocks and make recommendations about whether to buy or sell. However, this type of analyst makes recommendations only to the individuals in charge of making investment decisions for a fund or pension plan. He or she makes recommendations for the fund managers and tries to help them with investment decisions.

Impact

Sell-side analysts work for brokerage firms, and their recommendations result in more orders for the firms. Some argue that their role is simply to generate business for the firm that employs them. Buy-side analysts' recommendations are not available to anyone but the fund managers who employ them.