Goldman Sachs and Morgan Stanley are going head-to-head with the likes of Bain and Mckinsey, hoping to sell research services to companies to offset big falls in demand from their traditional clients in asset management.
Historically, the reams of research and economic analysis produced by Wall Street’s army of “sellside” analysts has been targeted at hedge funds and fund managers — the “buyside” in industry jargon.
But investment groups have come under ferocious fee pressure in recent years and are trying to cut down on costs. At the same time, new regulations stemming from the EU — and which have washed over the US — have required banks to charge investors for the research they provide, rather than bundling the cost into commissions for trading.
As a result, fund managers have slashed budgets for spending on research, spurring banks to look for new opportunities in the corporate world.
Simon Bound, global head of research at Morgan Stanley, said: “The catalyst is pressure on the overall business. These are incremental dollars we didn’t think about before, that we are now trying to bring into the firm.”
The motivation is somewhat different at Goldman Sachs, where chief executive David Solomon has been aiming to build relationships with executives at smaller companies, hoping that they can boost the bank’s investment banking revenues.
Steve Strongin, the bank’s global head of research, said: “The shift is very real. There is a broader recognition that research can be useful to our clients . . . beyond the investment industry.”
