And when even big firms like Merrill Lynch are going online and cutting commissions to retain customers, there's no margin left to pay for research aimed at the little guy. But the message is about something other than what's best for your portfolio. Its core businesses are investment banking and trading. At their most conflicted, research analysts are little more than shills for the investment banking clients of their firms. That wall is history.
Analysts actively participate in the process of bringing in banking business.
And they cover primarily companies that have generated big banking fees for their firms. Not surprisingly, the bias is to urge customers to buy, never sell. That, say veteran analysts, is not how the game was played 10 or 20 years ago. The dark side of research gets darker still. Analysts often invest for their personal accounts in the same companies they follow.