The Evolving Landscape of the Research Analyst Industry: Past, Present, and Future - The research analyst 2.0

The Research Analyst (RA) industry in India is at a pivotal juncture. Over the last decade, it has evolved from a niche profession limited to institutional research desks into a dynamic, tech-driven ecosystem where individual analysts and boutique firms are reshaping how investors consume research.

As SEBI tightens regulatory norms while simultaneously encouraging innovation through technology, Research Analysts today face both opportunities and challenges unseen in the early years of regulation. Let’s explore how the landscape has evolved — from traditional practices to the post-December 2024 reforms — and what the future may hold.

1. The Traditional Research Analyst Landscape

When SEBI first introduced the Research Analyst Regulations, 2014, the focus was largely on standardizing ethics and independence in the research ecosystem. Until then, equity research was often bundled with broking and distribution, blurring the line between independent analysis and sales influence.

Traditional Research Analyst services primarily revolved around:

• Equity research reports on listed companies

• Fundamental and technical analysis for clients and brokers

• Long-term investment recommendations through newsletters, PDFs, and emails

• Research mandates for high-net-worth clients

• Limited use of technology, with Excel-based models and static PDFs as the dominant format

In this era, research was traditionally disseminated through:

• PDF-based research reports or newsletters

• Periodic stock or sectoral outlooks

• Email or call-based recommendations

• Limited automation or analytics tools

The regulatory intent was to bring credibility, independence, and accountability into the system — ensuring that research advice was backed by documented rationale and free from conflict of interest.

However, the model was manual, compliance-heavy, and slow-paced, making it difficult for smaller RAs to scale or differentiate themselves. Over time, research delivery methods changed — but the regulations lagged behind the pace of innovation.

2. Post-December 16, 2024: A New Era of Reform and Reinvention

The SEBI amendment notification dated 16th December 2024 marked a watershed moment in the evolution of the Research Analyst profession. For the first time, the regulations explicitly recognized new-age research delivery mechanisms, algorithmic research models, and model portfolio services.

Here are the key shifts shaping the post-2024 landscape:

a. Regulation of Algorithmic and Model-Based Research

Until 2024, there was regulatory ambiguity around algorithms and system-driven recommendations. The amendment brought algorithmic research, back-tested models, and data-based signals under the RA framework.Now, any automated or semi-automated research output — whether delivered through an app, portal, or API — must be backed by a registered RA or an IA, ensuring accountability and transparency.

This change legitimized a massive segment of fintech and algo-driven startups that were previously operating in the gray zone.

b. Recognition of Model Portfolio and Thematic Research

Model portfolio services, which were earlier seen as a “grey area,” have now been formally recognized and regulated.This allows RAs to curate structured model portfolios for different risk profiles, investment themes, or market cycles — bridging the gap between pure research and actionable strategies.

It also creates an alternative to personalized advisory, allowing RAs to scale standardized insights without entering the IA domain.

c. Technology-Enabled Research and Distribution

With SEBI encouraging the use of apps, dashboards, and digital dissemination, RAs can now use their own digital platforms or partner with regulated intermediaries for research delivery.This has democratized access to research — enabling users to consume analysis, performance validation reports, and real-time updates at their fingertips.

However, the ease of dissemination has also led to commoditization — where the barrier to entry is low, and dozens of apps offer overlapping research ideas at aggressive pricing.

d. Commoditization and Price Pressure

As technology platforms aggregate research and users get multiple ideas from different RAs, research has become a commodity.Investors today expect subscription models, free trials, and deep discounts — challenging the traditional value perception of independent analysis.

While this increases reach, it also pressures small scale RAs to differentiate through specialization, niche themes, or bundled services such as performance validation, tax efficiency, or compliance transparency.

e. Rise of AI and Data-Driven Insights

Artificial Intelligence is rapidly transforming how research is generated, validated, and distributed. From AI-based screening tools to natural language generation of reports, and even AI-assisted sentiment analytics, the entire research value chain is evolving.

AI is not replacing analysts; it’s amplifying analytical capacity — enabling RAs to cover more stocks, identify hidden correlations, and improve turnaround times.

Yet, AI adoption brings new regulatory expectations around model explain-ability, audit trails, and human oversight, which will likely be central to future compliance audits.

3. The Future of Research Analyst Industry: Outlook and Our view

The next phase of evolution will not just be about compliance; it will be about credibility, creativity, and client trust.

Here’s how Research Analysts can stay future-ready in the evolving environment:

a. Build Technology-First Research Frameworks

RAs should invest in building their own research management systems (RMS), AI-assisted screening tools, and content dashboards.Automation in data gathering, financial modeling, and performance tracking will reduce cost and enhance consistency.

b. Integrate Transparency and Validation

Performance validation — through independent CA certification or Performance validation agency, whenever it takes shape — is now an essential part of credibility. RAs should make validation a core differentiator, showing verifiable outcomes rather than anecdotal success stories.

c. Move from Stock Tips to Research Products

The future belongs to research products, not just recommendations.Curated model portfolios, quantitative research modules, risk-adjusted ranking systems, and sectoral outlook reports will attract serious investors and justify higher pricing.

d. Create Multi-Channel Delivery Ecosystems

RAs must diversify beyond PDFs and Telegram — adopting mobile apps, APIs, and partner integrations with brokers (Institutional client base) or fintech platforms.This ensures wider reach and seamless research delivery aligned with modern investor behavior.

e. Focus on Niche Expertise and Branding

In a commoditized environment, specialization is the new scale.Focusing on sectors, market-cap categories, or unique methodologies (e.g., ESG, turnaround, or quant research) helps build authority and brand recall.

f. Adopt Ethical AI and Compliance Automation

AI tools for research and client communication should include human validation and data protection safeguards.RAs should also explore Regulatory Tech tools that simplify record-keeping, communication logging, and audit trails — ensuring 24x7 compliance readiness.

Conclusion: The Research Analyst 2.0

The Research Analyst profession is transitioning from a compliance-bound function to a technology-driven knowledge enterprise.The reforms of December 2024 have unlocked new opportunities — from algorithmic research and model portfolios to validation and digital scaling.

However, with opportunity comes accountability. The future RA will not only need analytical depth but also digital agility, ethical discipline, and a transparent performance framework.

Those who embrace technology responsibly while maintaining research integrity will lead the next wave of investor trust and innovation.

Author

CA Tarun Nagpal