Frost develops products and solutions spanning the entire unbundled services vertical.
Frost creates customized solutions to manage the complexities of research content procurement in the unbundled commission environment. Key areas include:
Management/monitoring frameworks that enable PMs/analysts to maximize the potential of the unbundled research universe.
Deploying united internal information architecture integrating faceted, semantic search ontologies designed to reflect the firm’s investment proccess.
Developing “Proprietary Research Networks” to generate “Differentiated Alpha”.</p>
Frost Method Research Valuation Factor Attribution Framework (TM/PP)
Transforming firm-specific Broker Vote data into dynamic monetary research budgets.
CSA Optimization - Establishing scalable, firm-specific CSA programmes.
Helping Managers Meet New Research Commission Requirements
Establishing practical, firm-specific, approaches to create durable, inobtrusive research valuation/budgeting methodologies.
Mitigating the structural decline of sell-side research budgets.
Technologies to maximize research spending ROI.
Preparing for greater asset owner oversight/benchmarking of research spending.
Optimizing CSA execution “portfolios”
Documentation and reporting.
Risk Mitigation - Managing the operational, fiduciary and regulatory risks of the more complex unbundled research assessment and payment landscape.
Reporting - Process for calibrating, analysing and communicating research procurement/payment workflows for client and regulatory reporting. New ERISA/UK FSA regulations and best practice.
Research Cost Analysis/Benchmarking - One of the key challenges for asset owners in selecting and assessing asset managers is the degree to which those managers are responding to market structure change.
Best Execution regulations and the widespread use of “Trade Cost Analysis” have long ensured that asset managers are surveying the fragmented execution landscape.
The UK FCA’s “Conflicts of Interest” document and relatively recent ERISA reporting requirements will significantly increase scrutiny over the ~$20 billion per annum in asset owner commissions spent by asset managers on research and related services - often a key determinant of asset manager performance.
Frost solutions allow plan sponsors to meet the annual ERISA research spending reporting and valuation obligations. Frost provides analytical structures for classifying and valuing conventional and “alternative” research inputs within an asset manager’s research analysis and procurement methodology. This gives asset owners valuable perspective on the relative approaches of their underlying managers to market structure change - providing insight into the “value” derived from (their) reseach spend that in turn influences the risks and returns of the asset manager and analysis of the aggregated risk for the fund as a whole.
Asset managers will be able to assess research “value” relative to their peer group.
The process aids both asset owners and managers with regulatory and client reporting.
Execution Commission unbundling effectively ends the investment banking oligopoly over asset manager research spending. A key risk to investment banks is being disintermediated in the unbundled environment - being paid via CSA payments from other banks rather than via execution, as asset managers reduce the number of equity execution counter-parties.
The Frost Investment Bank CSA diagnostic is an analytical framework designed to develop CSA strategies tailored to each bank’s specific strengths. The process addresses client/market analysis, operational issues (including frequently overlooked CSA FX exposures) and CSA software system selection. This culminates in a series of ROI-driven implementation options for CSA execution products, thereby helping banks to remain relevant in the equity execution business.
Research Optimizing Research Production Frost helps investment banking research departments increase research ROI by optimizing production systems and maxmizing the potential of multi-media digital distribution.
Cost of Capital Driven Research Cost Allocation Models Frost also employs proprietary Cost of Capital Allocation Models to help research producers better understand cost, required return and implicit price levels for research products adjusted for the firm’s institutional client base. This provides guidance on product and client ROI and facilitates a return-driven analysis of alternative research and distribution models.
Research Content Producers
Unbundling liberates ~$20 billion in asset manager research spending that is now available to purchase virtually any type of research - not just products produced by investment banks. The key challenge for all research producers is to optimize production and distribution to reach the decision makers at asset managers who control that spending.
Frost offers digital strategy solutions to enhance “findability” and help navigate robust content firewalls employed by many asset managers.
Our other consultancy areas:
Equity market service providers