Financial Research: Rumblings Get Louder

February 8, 2018

Regulations are having causing small tremors in the high altitude research business. I read “U.S. Asset Managers Shake Up Equity research as Banks Cut Back.” The write up offered several pieces of intelligence which might be considered “real” news.

First, outfits with money to invest and “churn” are hiring people who know specific things; for example, a former product manager at a company manufacturing gear related to artificial intelligence. No MBA needed was the take away for me.

Second, big money outfits have cut back on buying research. According to the article, one big money executive stopped buying bank research and learned “that he could live without most of it.”

Third, I highlighted this headache inducing statement for the providers of high end research:

Major global investment banks slashed their equity research budgets from a peak of $8.2 billion in 2008 to $3.4 billion in 2017, according to Frost Consulting. McKinsey projects the top 10 banks will cut those budgets by another 30 percent in the near term…

My question, “What happens to the Investext business?” Another one: “What acquisitions will big money companies make in order to deal with the changes in research?”

Worth watching.

Stephen E Arnold, February 8, 2018


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