AMWatch

Pandemic and digital meetings nearly halve average price of one-to-one analyst meetings

While Mike Carrodus, chief executive of Substantive Research, expects temporary "frenzy" of in-person analyst meetings once a Covid-19 vaccine is available, he thinks that in the long term, fund managers will seek to preserve the savings gained from digital engagements. 

Will there be a temporary "frenzy" of in-person meetings once a vaccine against Covid-19 becomes available? Mike Carrodus, chief executive of consultancy Substantive Research, says asset managers do not rate virtual meetings the same as face-to-face interactions. | Photo: Pexels: Sora Shimazaki.

The average price of a one-to-one analyst meeting has almost been halved since the start of the Covid-19 pandemic due to a perception that digital versions lack intimacy and offer less value, reports FT.com.

One-to-one analyst meetings make up the bulk of the budgets which asset managers set aside for sourcing investment ideas. The price varies but can run into several thousand dollars.  During the pandemic, however, the price which fund managers are willing to pay for sell-side research has fallen dramatically due to a shift to digital meetings, according to a survey of fund groups that had a combined USD 4.9trn in assets.

"Asset managers do not rate virtual meetings the same as face-to-face interactions," says Mike Carrodus, chief executive of consultancy Substantive Research, which carried out the analysis.

"They lack the value derived from the informal side of physical meetings, where questions and analysis that were unscheduled would still be addressed."

Video calls also tend to be shorter than in-person meetings which reduces their price tags, he adds. Fund managers are also paying less for group analyst meetings, with the value of these interactions falling 35 percent since January.

Will there be a return to the 'old normal'?

The findings underscore the intense pressure facing sell-side research providers, who are already reeling from a shake-up triggered by sweeping EU rule changes three years ago, writes the FT.

Mifid II aimed to curb conflicts of interest and rationalise the supply of research by forcing asset managers to pay for analyst insights separately to trading fees. This resulted in fund managers slashing their research budgets by 20-30 percent, according to the Financial Conduct Authority, which strained providers' revenues.

While Carrodus predicts a temporary "frenzy" of in-person analyst meetings once a vaccine becomes available, he says that in the long term, fund managers would seek to preserve the cost savings gained from digital engagements.

"We've all learnt that there are some things we don't have to do physically," he says.

English Edit: Nielsine Nielsen

 

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