One brighter spot for smaller sellside firms this year, is that there is a lot of institutional market share up for grabs.   Bear and Lehman and Merrill/BofA have opened up a sizeable chunk of share, and many hedge funds are reassessing their allocations to those  remaining bulge firms.

But smaller sellside firms will need to get organized qujickly if they want to take advantage of this opportunity.

A helpful starting point is to  think like an attorney.   Not litigiously (please) but in tracking billable hours.  That attorney phone call to discuss the project.  Is it free?  That lunch to review progress?    That piece of research?  No, no and no.   Attorneys are ruthless at keeping track of every possible billable minute.  If an associate doesn’t bill 50 hours a week, they are in trouble, and if they don’t track it, it isn’t billable.

Brokerage firms don’t bill for hours but they assuredly bill for activities.  Billable Activities – any and  all activities that a Client might give you a vote for.   These include Corporate access meetings, 1x1s, field trips, client visits, analyst visits, substantive analyst calls, lunches with industry experts, conference calls or video conferences.  What is not billable?  Sales calls, voicemails, emails.   

Which is why CRMs (customer relationship management) systems make such incredibly poor billing systems.   They mix billable and non-billable activities together, and they are also very poor at reporting.  Law firms don’t use their CRMs for billing, and attorneys generally don’t prepare the bills.  They discuss them with clients.  CRMs are one thing, billing systems another.

Likewise, brokerage firms need to track Billable Activities.  Ruthlessly.   And these billable activities need to find their way into a central “billing” system that tracks everything.  And report  it accurately Client by Client.   So that the salespeople can start negotiating their way to a bigger share of commissions – based on hard substantiated facts, and leaving nothing out.   

Many brokerage firms keep different activities in different systems.    Analysts use one tool to monitor phone calls with Clients. Roadshows are kept in another system.  Conferences another.   This is  not an obstacle – it can even be a good thing – and is not an excuse for inaction.   Because these different systems can be ported to a single billing and reporting system – without causing any change at all in how people work.

This entry was posted on Friday, May 1st, 2009 at 12:17 pm and is filed under Corporate Access Meetings. You can follow any responses to this entry through the RSS 2.0 feed. You can skip to the end and leave a response. Pinging is currently not allowed.