Skip to Content
Stock Strategist Industry Reports

Who's Emerging Stronger From The Financial Crisis?

Our assessment of business-model and headcount changes since the beginning of the crisis.

Mentioned: , , , , , , , , ,

Investment Banking is a Human Capital Business
The investment banking business is predominately driven by relationships and brains. The more traditional investment banking lines of underwriting, financial advisory, and private wealth management (the area into which many investment banks have recently expanded) are based on relationships. High-margin underwriting and financial advisory deals flow into investment banks through the connections built up by rainmakers while on Wall Street and over their tenure in the industry. Relationships with accredited investors also enable investment banks to distribute underwritten securities. Similarly, the wealth management division's financial advisors gather and retain assets from their networking and relationship management skills.

The other common legs of investment banks, asset management and sales & trading, are more a result of brains. Healthy assets under management growth comes from benchmark-beating performance and the resulting net asset inflows. The ability to generate a track record of outperformance comes from having a team with differential and superior insight. It is also firms' research analysts' insight that forms the backbone of many trading operations. Finally, it is in the minds investment banks' employees that the genesis of financial innovations that satisfy the investing and risk-management needs of clients are created.

Michael Wong does not own (actual or beneficial) shares in any of the securities mentioned above. Find out about Morningstar’s editorial policies.

Transparency is how we protect the integrity of our work and keep empowering investors to achieve their goals and dreams. And we have unwavering standards for how we keep that integrity intact, from our research and data to our policies on content and your personal data.

We’d like to share more about how we work and what drives our day-to-day business.

We sell different types of products and services to both investment professionals and individual investors. These products and services are usually sold through license agreements or subscriptions. Our investment management business generates asset-based fees, which are calculated as a percentage of assets under management. We also sell both admissions and sponsorship packages for our investment conferences and advertising on our websites and newsletters.

How we use your information depends on the product and service that you use and your relationship with us. We may use it to:

  • Verify your identity, personalize the content you receive, or create and administer your account.
  • Provide specific products and services to you, such as portfolio management or data aggregation.
  • Develop and improve features of our offerings.
  • Gear advertisements and other marketing efforts towards your interests.

To learn more about how we handle and protect your data, visit our privacy center.

Maintaining independence and editorial freedom is essential to our mission of empowering investor success. We provide a platform for our authors to report on investments fairly, accurately, and from the investor’s point of view. We also respect individual opinions––they represent the unvarnished thinking of our people and exacting analysis of our research processes. Our authors can publish views that we may or may not agree with, but they show their work, distinguish facts from opinions, and make sure their analysis is clear and in no way misleading or deceptive.

To further protect the integrity of our editorial content, we keep a strict separation between our sales teams and authors to remove any pressure or influence on our analyses and research.

Read our editorial policy to learn more about our process.