December 20, 2022

The Future of Research and Data Budgeting

Last month, I participated on a panel at the Unbundling Uncovered London 2022 event to discuss the key issues affecting the external research and data markets, and how research providers are being valued and rewarded in a volatile market climate hosted by Substantive Research. During the event, I was interviewed and asked several questions on the importance of regulation in research and data markets, and how buy side approaches to research budgeting, valuation and consumption are evolving? 

Regulatory Backdrop 
Does the regulatory backdrop matter in research and data markets, and if so, where does it matter most?
Doug: I think the regulatory market matters for research, less about data. I think with the differing regulatory markets between Europe, UK (United Kingdom), and the U.S (United States). and the approach that they are taking, it is creating this unintended consequence, which is making it difficult for asset managers to properly pay for services. We have talked about the unintended consequences of the big getting bigger, providing more services, and continuing to get paid for those services. But the smaller broker-dealers in the U.S. may find it challenging to continue to service the European asset managers and properly get paid, and they must decide whether it is a business model they want to continue. So, regulation has a big impact on what happens in research and how they provide services.  
Importance for Research Providers 
What is the most important thing that research providers need to do to navigate a tough time for many firms within their client base?

Doug: They’ve got to be much more thoughtful around the delivery of their services. Digital transformation is happening more extensively in capital markets, and they need to take ownership of what products their clients want, understand the cadence in which they want it delivered, what they value more, whether it is corporate access, written research, time on the phone with the analyst, or all the above, and get to a better understanding of how they can have bigger impact with targeting of those services. Utilizing technology becomes a big part of servicing clients to track and understand all their needs. If you use the right technology, it can help you target the right clients based on their interests and research preferences as opposed when you have something timely and topical to screen clients’ interests and service preferences as opposed to what happened historically, which was what I call research pray and spray. Sending all your clients a summary and links to all your research at the same time. If you are still doing this, it is not delivering much value. If you are sending healthcare research and content to a portfolio manager that focuses on the consumer sector, you’re creating noise and your email is just going in the bin. And if it continues, clients will just stop paying attention to those providers that are not tailoring the content to their needs.  

Greatest Innovation 
Where have you seen the greatest innovation in the market, and in which areas is your firm innovating right now?
Doug: Its technology, employing technology to better manage their client base. We have developed technology and created some partnerships to manage the quality of data in the CRM and the resulting interactions that are going into the broker vote process. Quality interaction data is important to the relationship between the sell and buy side for the voting process. Research and Sales providers want to have a better dynamic, more information and more transparency in the vote, but at the end of the day, you still need to run your business, and you still need to build relationships with your providers, whether you are on the research side or the buy side. Relationships matter and technology is not always going to change or help you build better relationships. You must continue to pick the phone up, spend time with your clients and really engage them with the right level of dialogue, content and conversation to have an impact.  

SS&C Tier1’s CRM today does more than just manage your clients’ details using our technology. There are all sorts of interest-based models to tag clients’ interests, whether it is at a security level or something thematic in terms of research that is being delivered.

We also distinguish between a near term indication of interest and long-term interests as holdings in their portfolios. IIOI’s are more important to a portfolio manager than targeting them based on what they hold. We help our clients when they come out of their morning call with targeted client campaigns and content they want to push out.

Clients can search for a topic like healthcare, a conference, a couple other things, and really pull out of their contacts who has the most interest and relevance to that topic.  Upon procuring that client list they can then start their calling campaigns using our technology and workflow, move to email, send personalized email blasts to further extend that reach.

We also offer data sets to get into ownership data and readership information to dig deeper into the background of the clients and better understand what it is that they are looking for. Technology that we provide helps them with streamlining those processes and being more efficient and targeted in their client outreach. 
Most Interesting 
Being on a panel, and there have been quite a few today, what has been most interesting that you have picked out of everything?  

Doug: There is still a lot of confusion. There are many people out here that have created jobs out of managing the process and trying to understand how to navigate the sell and buy side between different regional markets and regulations. There is not a clear path forward, unfortunately. Something needs to change, but the debate goes on.  

Key Takeaways from Unbundling Uncovered London 2022  
Click here to review a few top tips gathered from the speakers. 

SS&C Tier1 provides award-winning solutions that help firms accelerate relationships and capitalize on insights and intelligence that drive revenue with modular CRM. Contact us today to learn more about our software solutions for investment banking and equity research firms.