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How Do You Put a Price on Investment Research?

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Is that research report worth more than the paper it’s printed on? That question is upending money management as new regulations in the European Union disrupt the way banks and brokers do business. Gone will be the days of offering market analysis for free, part of a bundle of services offered to clients. Soon, brokers will have to decide how much to charge for research, and for the access to top executives that typically comes with it. Some firms are modeling packages on cable TV subscriptions, running from "basic" to “pay as you go” to “all-in” offers. As the cost of an analyst’s time and work becomes transparent, investors are expected to be more selective about what they pay for. The ranks of researchers already are shrinking.

Money managers have typically gotten research reports and corporate access -- conferences, roadshows and face time with executives that can provide an information edge -- as added services from the banks and brokers they choose to execute their trades. EU lawmakers wanted to root out conflicts of interest that they said left investors facing opaque and steep costs. The concern was that top money managers might route their transactions (and accompanying commissions) to the firms that offered the best tips and access, rather than the best prices for executing a client’s trades.