There are two categories of analyst reports you may find through your brokerage firm: in-house reports written by analysts working for the firm and those issued by independent research firms, such as Standard & Poor's and Thomson Financial, which are unaffiliated with a brokerage business.

Brokerage firms employ analysts who provide in-house research on a range of companies to the firm's brokers and their clients. The cost is underwritten by the firm as part of the service they provide, and is covered in part by the commissions investors pay on their transactions. In contrast, companies that offer independent research profit by selling their information either to firms or directly to individual investors.

Although you may like the idea of getting research from an independent source, be careful not to assume that independent research is always better. There are knowledgeable and experienced analysts working for brokerage firms, as well as for independent companies. And an analyst may move between the two types of firms several times during a career.

Sam Stovall,
Chief Investment Strategist at Standard & Poor’s

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