Predicting research houses
Sunday, December 5th 2010, 11:31AM 
5 Comments
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On 9 December 2010 at 12:45 am Forthright said:
It is not a surprise the FundSource conference was poorly attended, you can’t keep dishing up the same hash and expect attendee’s to be licking their chops for second helpings.
In my opinion, Morningstar will emerge the winners in the quant race, other research providers will simply find it cheaper to do a deal with Morningstar for the figures and use their own skills to carve out a niche on the qualitative side. Qualitative on the other hand is when the real work gets done. Providing opinions on the folk who manage your clients’ money can leave a research house with a tidal wave of egg dripping from facial features. A recent example is Morningstars, we did, we didn’t, we might have, but we were misunderstood, recommendation of certain credit funds. This I am sure did not leave future AFA’s with much comfort of who would be in their corner when it came to a recommended product failure, resulting in a punch-up with the authorities.
What I find intriguing is how an AFA will recommend an ‘Unrated’ bond issue in the future. Also which research houses will provide the best research for future proofing portfolios’? How will the research providers recognise and provide AFA’s information on the corporate bond risk which was associated with issues such as Babcock & Brown, Blue Star, Nuplex, Irongate, Powerco, Yellow Pages Group etc etc?
I reckon there is already a stampede of future AFA’s to the comfort of relying on well researched recommended lists provided by their current or future platform supplier.
On 9 December 2010 at 5:35 pm Independent Observer said:
Forthright assumes that platforms are part of the industry's future... I'm yet to be convinced that technology will surpass the requirement to pay for these services... On 14 December 2010 at 10:35 am traveller said:
The best research is done by Norman Stacey, a director of Diversified Investment Strategies. Read his View on www.diversified.co.nz On 20 December 2010 at 10:43 pm oscar d nail said:
All the best for NZ Research houses. Commenting is closed
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The winner will need a robust database to efficiently grind through the quantitative aspect of research, with a responsible (and efficient) method of delivering the qualitative stuff. This latter component will divide the men from the boys, and is where the bulk of the value add is delivered.
With NZ IFA’s under the regulatory spotlight, research will become a necessary requirement for their own survivorship in business. Unfortunately for IAFs, they will be required to digest and assimilate the research for the benefit of their clients – albeit that they won’t be able to hide behind it if something goes wrong (ie: the research houses will provide all care but no responsibility). To effectively capture the majority of the domestic & foreign investment options, the research house will require reliable offshore research affiliations. Finally – the research house will need to make a significant commitment to the NZ IFA market, acknowledging that there is no prize for second place.
Putting all of this together, it will be difficult (near impossible) for some existing players to survive in this space.