Are financial analysts really free in the way they form their opinions or must they contribute to ensuring that client portfolios are regularly re-deployed? This provocative question was the starting-point for the discussion at the 7^th Financial Community Update.

In his introduction to the subject, Dirk Schütz, the Chief Editor of the business magazine Cash, said that he was very much in favour of excellent research which forms a valuable basis for the work in journalism. But at the same time, he stressed that in his opinion, the quality of stock research has sharply deteriorated in recent years. He mentioned as reasons the increasing regulation within financial markets, the constantly rising flood of corporate news and the general herd mentality among the analysts. He said that it was no longer interesting for journalists to quote the opinions of analysts because they usually attracted very little attention.

Dr. Leo Th. Schrutt, Head of Group Investment Research and Private Banking Portfolio Management at Bank Julius Bär, and Mirko Sangiorgio, member of Group Management at Swissfirst and a highly experienced analyst, addressed current developments in the ensuing discussion. According to Schrutt, the full independence of research requires a clear organisational and spatial separation from the other divisions of the bank. However, this is only practicable to a limited extent. Asked about the high costs of a research team, Schrutt said that as regular surveys and research proves, the client continues to perceive the relevant Surveys and recommendations as added value. If that were not the case, stock research would lose its reason to exist at all. Mirko Sangiorgio also complained about the deterioration in the quality of analyses. The reforms had led to a situation in which the definitions of expressions used often took up more space than the real content. As an investor, he wishes that there were more counter-opinions. Schütz supported that view by saying that those responsible for the media also hope for more meaningful recommendations. But Schrutt countered by saying "We don't actually like talking with journalists because our statements are often quoted completely out of context. We are primarily responsible to our clients."