While the research industry worldwide has endured substantial declines since the financial crisis of 2008-09, there are still roughly 10,000 analysts employed by investment banks, brokerages, and boutique research firms like Capital Markets Group.
Research remains an integral component of the investment management process, playing a pivotal role when devising overall strategic asset allocation and portfolio formulation. Historically, different firms such as sell-side firms, buy-side firms, and investment banks have been the largest consumers of investment research. These participants are now under enormous pressure to manage their research functions efficiently in today’s volatile markets.
Following the financial crisis’s devastating impact on the financial services industry, investment management firms began to re-evaluate their research practices—not just to optimize costs but also to enhance overall efficiency in order to deliver improved quality research and advice to clients. However, firms looking to overhaul their research practices often encounter multiple challenges due to increased regulatory pressure, diminished advisor productivity, and elevated client demands.
Firms have now reached an inflection point concerning their research practices and often find themselves balancing the delivery of in-depth research with cost-effectiveness. The primary reasons leading investment management firms are increasingly outsourcing their investment research services to third-party vendors include cost arbitrage, reduced time-to-market, generating new investment propositions, and access to high-quality personnel.
The role of external research is gaining ground due to the strongly perceived value that external providers deliver, and firms are slowly realizing the benefits of an outsourced research process. As firms increasingly start to leverage external research partners for their investment research needs, two main source models are emerging: captive and third-party.
Making a well-informed decision to outsource investment research will be vital, requiring firms to follow a few criteria for evaluating a potential outsourcing vendor/strategic partner. Evaluating and choosing a best-fit strategic partner will require firms to follow a well-defined process which includes: identifying which research processes are to be outsourced; assessing the vendor’s HR and domain capabilities; negotiating service level agreements; evaluating the intellectual property and compliance standards of the vendor; selecting a sourcing strategy that best aligns with their business objectives.
Despite the fact most firms still view research as a vital in-house function, many are re-evaluating the economics and overall operations of their research function. Though outsourcing presents multiple advantages for the financial industry, various firms are expected to outsource different processes to leverage the sourcing model that best suits their business strategy.
The reason for the above is clear: outsourced research delivers a very useful function in our current financial markets. At Capital Markets Group, our team of seasoned research analysts shares their insights and industry knowledge with investors around the world.
CMG provide clients with the capabilities to boost their freedom to achieve superior results through our global network, serving the leading banks and financial institutions, including JP Morgan, UBS, Credit Suisse, and many more.
About Capital Markets Group
CMG provide unparalleled investment research to leading banks and financial institutions around the world. We take great pride in the quality and independence of the research we provide, underpinned by our high calibre team and unique research methodology.
Media Contact:d
Teddy Ruxbin
Tel: 852-2319-4420
Email: info ( @ ) capitalmarkets dot group
Website: https://www.capitalmarkets.group
Address: Central Tower 28 Queens Road 999077 Central & Western District, Hong Kong.
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