One of the institutional equity guys at a major bank represents our account, i.e. the hedge fund I work for. I sent him requests for research and to sign up for a couple management meetings on Monday. It’s Wednesday now and I haven’t received any response.
Anyone here been on the institutional side as a salesperson, or have worked on the buy-side dealing with these people before? This may sound silly for me to ask as someone that had worked in sell-side research for several years dealing with salespeople every day, but maybe I just don’t have my facts straight. I thought what equity salespeople were supposed to do for folks on the buy-side was to connect us with management teams, answer basic and menial inquiries for research, and set up lunches/dinners for us while we send our trades through their desk in recompense. It’s a pretty basic business relationship if you ask me.
I’m not trying to sound demanding here, but I think waiting 48 hours for a response from this guy is excessive. I’m sure I’m not his most important client, but we are prime brokered by this firm and are sending them trade commissions. If he can’t be bothered to respond to my e-mails in a timely fashion, what kind of “service” is he really offering and why should I even bother sending my trades through his desk? What am I even paying him for? I have a dozen other banks I could be doing business with instead.
I’m counting on my AF cronies to help me understand if I’m missing something here. I don’t want to get too worked up over nothing, but just want to know one basic thing – why the excessive delay in e-mail responses considering what we are paying his company to do our trades?
Most salespeople, both buy side and sell side, are focused on minute grammar related issues and don’t have time for estabilishing and building relationships and actually developing business. See the “Nitpicking” thread.
Most are worthless who over promise and under deliver. I know a few who are qualfied as walking the talk trumping a CFA. But most others simply look good in high heels and mingle well at cocktail parties.
My sales coverage is usually super quick. I think it depends on the person, and how your relationship is with them. If it’s been 48 hours, most likely they forgot or missed your message.
I’m in institutional sales, although not on the side you’re talking about, but it doesn’t matter. You should hear back from any salesperson within 24 hours. Even if it’s just an email saying it’ll take more time…always have to connect with your client within a day. Standard practice.
It’s likely your email just got overlooked. Send another with some added urgency behind it.
They work for commission dollars (directly or indirectly), so more trades or payment for research equals more attention and service from them. If your firm doesn’t do enough business with them, then they are too busy servicing accounts that pay. it’s a very competitive business and commission rates have come down a lot. A good saleperson adds value and does the easy work very well (send research, sign you up for meetings, etc). My guess is that he either overlooked it, your firm isn’t paying his firm enough, or he won’t last in this business.
^ Good points. Also agree with brain_wash_your_face, Sweep the Leg, ohai, QuantJock_MBA…looks like we’re all on the same page. I guess I’ll politely follow up with a heightened sense of urgency and see where things go.
Client privilege, brother. The other brokers have fought hard for our business; this guy is bringing a knife to the gunfight.
Client has the right to be difficult up to the point that they don’t want to do business with you any more. Of course, the sales person is still human, and if you are super nice, you will not make their life difficult. However, you still paid for the service.
^ This. I find too often that we all (myself include) rely on email. If you’re like me, scanning emails on my mobile while taking an ish, it’s likely that many get overlooked. Just call the poor sap.
Maybe he found some clown’s email which contained a grammatical error. He obviously had no choice but to send an alert to the Managing Director and to send a recall message to all sales and research contacts in his contact list. It is understandable how he could have missed another email under these circumstances.
Numi, what’s the turnover on your fund? If you are one of these buy and hold shops like where bromion works then you may not be generating the requisite commissions for prompt service.
We’re different in the sense that we consider ourselves essentially value investors, one quarter at a time. Thus, even though we are not “traders” per se, sizing our positions is an important part of how we manage risk on both the long and the short side. That doesn’t mean that we bet on quarters per se, but rather that we’ll actively size our positions depending on how our risk/reward profile changes, the timing and impact of hard catalysts (and to a lesser extent soft catalysts) as they get closer to materializing, etc. I don’t know the exact details of our P&L arrangement with this broker, but even as a smaller fund, I do feel feel pretty confident about generating requisite commissions that would justify the salesperson’s time.
Anyone lacking the time sequence on either buy or sell side might not fully appreciate how how much the industry has changed over the last 10 years, and particularly over the last 4. Sales was already a struggling profit center of various brokerage firms due to decimalization, and the struggles have intensified since Lehman as turnover has accelerated both within brokerage firms (research and sales) as well as on the buy side with closing funds. I get a quarterly updated contact list internally, and it’s actually becoming hard for our in house trader to keep the list current because there has been so much turn over among sales people in both debt and equity. I actually now expect any call I make to be answered with, “He / she no longer works here.”
The upshot of this is that legacy relationships are mostly dead, and the sales person may be much more focused on short-term profits and trading history than in the past.
It’s also true that policies have changed post-Lehman at many firms. Citigroup, for example, informed me two years ago that the firm I work for was no longer allowed to speak with analysts because we were under Citi’s newly imposed $500,000 minimum trading commission requirement. $500k? Lulz dude. No chance. These research departments really exist for large institutions now – multi-billion AUM shops.
The truth is there is little reason to trade through these brokers in most cases anyway since Instanet and other electronic platforms not only have better execution (which can be programmed with various algos) but is significantly less costly on a per trade basis.
The analysts at various brokerage firms rarely provide much value, and their research is often available for free. It’s a goofy business model – “Here, take our work for free, and call us if you feel like every paying us.” Cool, thanks!
Personally, I prefer the research at 3rd tier brokers anyway since they are able to make more contrarian calls (less institutional mandate) and because they’re usually the only brokers (if any) covering the stocks I look at. They’re also usually willing to talk for free or very low cost if there is an information trade in place.
