The Director of Research at Edison Investment Research, Neil Shah, 44, believes he is expectedly at a better place than before. After working as a bank analyst in Goldman Sachs, he now plays audience to the ever changing world of corporate research. Following the introduction of Mifid II, a set of rules that caught the research industry offguard. Under the new regulations, investment managers have to inform their clients on how much they pay banks and brokerages for research, something which they previously received for free in exchange for placing trades.
The changes that followed brought to light that most of the research that came as part of his job, was inessential. The new regulatory regime also raised eyebrows at the future of independent research providers like Edison. However, Shah, a practising Hindu, considers his company's business model more secure than any of its peers'. After leaving Goldman in 2002, he, along with a friend, launched a new venture- Tusker Capital, a hedge fund built from money given by friends and family. However, it wasn't soon that he realised the job wasn't for him.
Shah admitted that he "would have died" if he had stayed. "I don't have the psychology of a trader," he said. Two years later, he turned back to research. "I love research. But there was always a lingering doubt within me that felt that we hadn't done it particularly well when we went through the whole dotcom boom," he said. Later he met Fraser Thorne, and Peter Molloy, founders of Edison, in 2003. "(Their company) was so small, they were embarrassed to show me the office," he said. "We held most of our meetings at the British Museum. I felt this was a chance, a soapbox, to create a different way of doing it," he said.
Edison grew to be an international company, with offices in four continents, and over 400 corporate clients. "We set it up just at the time Aim (stock market for small UK companies) went through this enormous boom. We were picking up quite a lot of work when brokers were bringing companies to market and then moving on to the next float, leaving these companies feeling orphaned," Shah said. Revealing his "eureka moment", Shah said it came in 2012, when the UK regulator issued a damning report on conflicts of interest in asset management. When several fund companies were failing to monitor the costs passed on to clients when they placed trades, he noticed that the research industry was on the verge of "profound" changes.
