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What's going on?
The long-touted joint venture between Société Générale’s and AllianceBernstein’s stock businesses appears to be going ahead, according to news out on Tuesday.
What does this mean?
The world of professional stock investing hasn’t been a happy place in recent years. The rise and rise of cheap, index-based investing has thrown a wet blanket on professional investment services, and the toxic spillover has splashed firms that cater to professional investors, as Société Générale (SocGen) and Bernstein do. The “strategic” reason for the venture, then, is that SocGen, strong in trading, and AllianceBernstein, strong in research, go together like peanut butter and jelly. But the deal’s probably a bid for strength in unity too, with the firms hoping their combined weight will keep them rooted amid the gale-force industry headwinds.
Why should I care?
For markets: Being clued-up will cost you.
Knowledge is expensive, at least for professional investors: a 2018 European rule change meant they could no longer use their clients’ cash to cover the fees they pay for research. So faced with the prospect of reaching into their own pockets, thrifty fund managers started hacking at the prices they paid research firms. That left the used-and-abused companies with a choice: ramp up the caliber and, in turn, their prices, or change their focus. SocGen originally chose to leave the business behind, but it looks like the firm couldn’t stay gone for long.
The bigger picture: Where pros go, retail follows.
Retail investors have a long list of cheap and easy trading avenues to choose from, so services really need to stand out from the crowd if they want to bring in users. One method’s proven popular so far: adding thought-provoking, actionable insights to a platform. If nothing else, the spate of deals in the pro world shows that quality research is still highly valued. Now, where could a retail investor find a platform bursting with world-class, bite-sized Insights… *cough cough*.
Originally posted as part of the Finimize daily email.
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