James Enck is a telecom analyst at Daiwa Securities and posts about disruptive changes within the European Telco sector on his blog Eurotelcoblog. He also has some great views on how technology is likely to change the securities industry.
Until Jan 2000, I worked in Institutional Sales for the US investment bank SG Cowen. In the mid 90s I became convinced that the sales role in banks would disappear as we know it.
Prior to the 90s the sales person was the key gatekeeper of client relationships. They filtered, broadcast and interpreted the analysts comments for their clients. As a result, the brokers relationships were the key to business success.
However, email and other technologies made it much easier for analysts to communicate directly with client institutions. This caused a dramatic flow of value away from the salesperson and led, in part, to the 'star analyst' culture we have now. This is evident through the pay cheques of each of the parties - declining bonus scales in sales and soaring ones in analytical circles.
Blogs like James' are a further nail in the coffin. For the large institutions, getting closer to the thoughts of the expert, insightful analyst is key.
With blogs and RSS, clients move closer to cutting out the middle man. The conversational style of blogs encourages James to share a broader range of thoughts than he might through a formal research publication process. He can now handle broadcast and interpretation (through comments) himself. He is better able to manage large volumes of clients himself. Finally using RSS, clients are can now filter the information they receive more closely.
James is a pioneer but I believe that we will see many more analysts moving down this route over the next few years.
As for the sales role, it continues to be marginalised. I believe that it will eventually morph into an account management role - responsible for winning accounts, negotiating commissions, ensuring the smooth running of the account, but talking less and less, day to day, about stocks and shares.
I encourage my friends in Equity Sales to wake up. You hide behind excuses about why this won't happen - ie compliance won't allow it. As a wake up call, I suggest you read this post from James. Clients seem to be responding!