In this groundbreaking survey, independent research firms shared anonymized information about their research fees and pricing structure. Because independent research firms tend to specialize in certain types of research, or even in specific industry sectors or geographies, the survey provides good proxies for the values for different varieties of research.
The 68-page study is particularly timely in light of increasing pressure from regulators for increased transparency of research fees. For this reason, the survey results are relevant for asset managers seeking to benchmark bundled research, in addition to research providers examining their own pricing strategies.
Integrity Research Associates conducted a survey of independent research providers from September to November 2015. Five hundred fifty firms were invited to participate in the survey and eighty-three participated in the survey, representing a 15% participation rate. We estimate that the survey respondents represent a sample size between 8% and 10% of the target population of independent research providers.
There was participation from all major geographical regions. U.S.-based respondents represented 61% of respondents. European research providers represented 22%, with 7% based in the U.K. The median respondent employed 6 analysts covering 70 stocks.
Analyst access and research reports were the most common research products offered by respondents. Median respondents offered six research products. Fundamental research was the main research methodology for nearly one half of the respondents, while macroeconomic research and policy firms represented over a quarter of respondents.
Respondents were asked to describe their fee structure, their average fee per buy side client, maximum fee from a buy side client and minimum fee from a buy side client. In addition, they were asked to provide a per sector fee if they charged by industry sector and a geographic fee if they charged by geography. We estimated 25% of the respondents were sector specialists and 40% were geographic specialists, supplementing the data provided by research providers that charged sector fees or geographic fees.
Fees by Products and Services
We segmented fees by the type of research offered, including fundamental research, economic research and primary research, as well as more specialized offerings such as technical analysis, policy research, short ideas and quantitative analysis. The study also established benchmarks for fees per industry sector and per region. We also examined fees by payment method, by participation in broker vote, by regulated entity, by location and by number of products.
We analyzed the variety of fee structures being used by independent research firms which range from menu pricing to per user pricing to project pricing to simply being price takers. We examined the impact of fee structures on revenues and which structures generated higher or lower fees.
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