What Financial Report Readers Should Know about Independent Analysts
As a financial report reader, you may wonder whether you can depend on any analysts out there. Well, the answer is yes and no. Certainly, some independent analyst groups — ones that aren't paid by a brokerage house or other financial institution but that provide reports for a fee paid by people who want them — report on companies as well.
The problem is that independent analyst groups work for people who can afford to pay them, meaning that you must have a portfolio of at least $1 million or be able to pay about $25,000 per year. Few individual investors meet these criteria.
Many independent analysts do sell the reports through financial websites for a per-report fee to individuals who are researching a specific company. Your rule of thumb about independent analysts’ reports must be to take what information you find useful but be sure to do additional research on your own. The report you buy from the independent analyst on a particular company was developed for one of the analyst's clients.
After reading about analysts, you may think you don't have a chance to get good information from them. Your best place to find research that isn't tainted by the investment banking business of your brokerage firm is the websites of major investment research firms like Morningstar and Standard & Poor's.
You have to pay fees to access their confidential services, but they're much more reasonable than the cost of using an independent analyst — they can be as low as $100 per year, depending on what information you need.