20/11/08
About Us
Why Pay For Research?
Many potential clients naturally wonder why they should pay for research. The answer is simple: because research really matters and you get what you pay for. Although there is a mass of economic and investment research distributed “free” by investment banks and brokers, the clients, of course, are paying for this through dealing spreads and commissions. But the investment banks and brokers naturally use the distribution of this “free” research to further their own objectives. It is no accident that in the late 1990s the bulk of the research, from both Wall Street and the City, about the “new economy” and the absurd level of stock prices, ranged from the favourable to the wildly enthusiastic.
Independence has always been important in the conduct of research and the provision of advice. These days, though, bearing in mind recent history and the pressures on investment banks, it is probably even more important. This has now been recognised by the regulators on both sides of the Atlantic and it is increasingly recognised by clients and commentators.
One apparent solution is to provide research in-house. But this is extremely costly and it is rarely possible to resource internal research departments fully at the requisite quality. Moreover, it is very easy for an internal research department to fall into re-affirming the views of senior executives – thereby defeating the object of the exercise.
The alternative solution is to buy in independent research from outside – either to supplement in-house research services or as a substitute for them. That is the solution we offer.
If such an independent service helps to make better decisions, as our clients say it does, then the cost is a small price to pay. And for many financial organisations, as clients and trustees increasingly absorb the lessons of the last few years, being able to demonstrate that they take at least some independent research will be a key requirement for attracting and retaining business.
