Many potential clients naturally wonder why they should pay for economic research, given the large amount historically distributed for “free” by investment banks and brokers. The answer is simple: because research is important and the quality is reflected in the price.
In reality, of course, clients have always paid for bank and broker research through dealing spreads and commissions. And they will be required to pay for much of it more explicitly after the implementation of MiFID II in January 2018. But this research is rarely independent or unbiased. 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 been recognised by the regulators around the world and it is increasingly appreciated 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 resources 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 excesses of recent years, being able to demonstrate that they take at least some independent research will be a key requirement for attracting and retaining business.