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'Are Financial Analysts Friends or Foes to Investors?

'Are Financial Analysts Friends or Foes to Investors?

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Financial analysts work for investment banking or brokerage firms . These firms are not only involved in providing financial analysis for investors but also underwriting the securities of the firms they are covering. The fees from underwriting contributes heavily to the overall operations of the investment banker and many financial analysts have relaxed their standards in doing financial analysis for their clients. Also analysts are under pressure not to make any negative comments about firms that provide investment banking fees.

Thus many financial analysts lack objectivity and do not divulge true facts to the investors . The investors naively follow the advice given by the financial analysts . Thus financial analysts tend to be a foe than a friend to an investor.

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