Equity researchers' beach holidays afflicted by apprehension & regret
European equity researchers may be sunning themselves on beaches now, but the moment of truth will soon come: did anyone actually vote for them in this year's Institutional Investor (II) developed Europe survey? The answer could mean the difference between a big bonus and almost nothing at all.
Results to the developed Europe survey are typically announced in early September. Last year, Bank of America won and Eric Lopez, BofA's head of EMEA equity research got to wear the II European crown on behalf of his team. This year, Theepan Jothilingam, head of EMEA research at BNP Paribas Exane, will be attempting to reclaim the top slot for his own people.
Veteran research insiders say the competition to rank on the European II survey is increasingly brutal and isn't entirely reflective of either the accuracy or originality of the research. These days, it's more about persuading clients to vote for you, while making yourself as alluring as possible in all marketing materials.
"One of the leading firms has a huge spreadsheet and the analysts have to confirm that they've asked each client for a vote and what the client's response was," says one researcher. "It's like a military campaign."
Voting closed in May, so researchers have already had a few months to wonder whether they did enough to woo clients before the final weeks of trepidation on a sunbed. This year's campaigns featured a few firsts in the UK, including a slightly wooden video featuring Jefferies top EMEA researchers making utterances about their 30% increase in headcount to some twinkly music.
With the potential for a few more job cuts to be made in September, results to this year's survey will be more important than ever, both for job security and pay. "It's become an important way for researchers to increase their bid value to other heads of research," says the senior researcher. "It never used to be that important, but then banks starting throwing campaigns at it."
Individual enticements can also matter. Another top ranked researcher tells us he won in the past by gaming the survey. "I looked at how it actually worked and realized that if I got a vote from a big firm with a lot of assets under management, it was worth 30X more than a vote from a little fund, so I stayed in the office when everyone went home and called the big funds up and shot into the top slot."
Possibly apocryphal stories also exist of salespeople inviting clients for lunch and suddenly producing an iPad so that clients can vote for the researchers on their teams.
Some researchers have opted out, though. "It's an absurdity," says one. "Clients can vote on sectors they know nothing about and the rankings have zero correlation to revenue or usefulness." That said, he suggests he may make a video soliciting votes next year: "I'm thinking me and my dog rapping about how great I am."
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