Many potential customers naturally wonder why they must pay for economic research, given the big volume of research that has been historically distributed and continues to date be distributed “free-cost” by investment banks and brokers. The answer is simple, because research is important, and quality is mirrored in the price.
In fact, of course, customers always pay for banking and brokerage research through the dealing of spreads and commissions. And the customers must pay for many of them more exclusively after applying the MIFID II in January 2018.
But this type of research is rarely independent or impartial. Independence has always been important for conducting research and advising. These days, however, given the recent history and pressures on investment banks to maximize their profitability, it’s probably even more important. This has been recognized by regulators around the world and is increasingly appreciated by customers and commentators.
An obvious solution is to provide research carried out within the investment bank or firm itself respectively. However, this is extremely costly, and it is seldom possible for banks and investment firms to have the necessary quality research departments. Moreover, it is very easy for a research department that operates internally within an investment bank to fall into the re-affirmation of the opinions of its senior executives-thus this research defeats the independence and is a biased research.
From another perspective the purely theoretical approach combined with the lack of work experience both in the real economy-market and in businesses, in terms of scientists conducting economic research in internal departments in these financial institutions and companies respectively, usually create a surplus of consultancy based on biased research which, typically, cannot be applied to the actual economy and ultimately confuse their customers.
Usually these surveys reflect the views and opinions of the financial institutions themselves, which above all look at optimizing their own profitability and then everyone else.
The alternative is to buy an independent research outside the investment bank or investment company-either to fill the bank’s or company’s resources or to replace them. This is the solution offered by our business Trust Economics.
One such independent research service helps to make better decisions, as our customers say it does, then the cost is a small price to pay for which the customer pays. And for many financial institutions, as customers and managers are increasingly absorbing lessons from the excesses of recent years, they can prove that they are receiving at least some independent research that will be a key condition for attracting and maintaining their business activities.