In the wake of the 2008 financial crisis, one of the major tasks that European financial regulators set out to accomplish was to examine how banks were conducting sales operations and building client relationships.
Nine years later, with the fallout from the meltdown as well as the subsequent euro zone crisis still hanging over the Continent, both regulators and investors continue to ask just how equitable those relationships are.
Initially, regulators pushed forward with a plan to unbundle sell-side research from bank relationships in order to mitigate banks’ incentive to give their highest-paying clients more information, or favor, than they provided everyone else. But reform initiatives have persisted. Regulators and investors are zeroing in on fees, product construction, and technology. Investors want better service, and they want to pay less for it.
This makes the sales challenge ever more complex and high-pressure. Salespeople must familiarize themselves with an ever-expanding range of products with increasingly nichelike functions to squeeze every last drop of return out of a low-growth environment. When any investor can pull up their online brokerage account and buy a low-fee exchange-traded fund, who wants a relatively pricey middleman? Sales teams have to focus on differentiation and value creation or risk obsolescence.
Through all of this, the leaders of Institutional Investor’s 2017 All-Europe Sales Teams have stood out for their ability to balance client service with contributions to their banks’ bottom lines.
“Back in 1999, when I started, sales was very bottom-up, single-stock idea-driven,” says Mehdi Ghozali of Bank of America Merrill Lynch, who is one of the top-ranked salespeople on the 2017 All-Europe Generalist Sales Team. “Since then, in equity sales we have had to adapt and deepen our knowledge of credit, derivatives, macro, and commodities dynamics just to understand what is going on and properly advise our clients in their asset allocation choices.”
Ghozali, based in Zurich, has worked with a small, close-knit group at BofA Merrill for 11 years. He says that over that period the sales team has become as much advisory-focused as product-oriented. Investors want to understand both long-term and short-term perspectives, and they look to their sales relationships for help. “Commercially, it is important to have a holistic view of client relationships and be able to interact with other teams to craft a coordinated approach and better use existing resources. This is something key accounts reward,” he explains.
Ghozali isn’t the only BofA Merrill salesperson to score on the generalist ranking: Timothy Cross, Regis Gonzalez Lamoureux, Matthew Hale, Conor McEvoy, and Andrew Wilks all receive high marks, giving the bank six of the top ten vote-getters in the generalist category (McEvoy leads the group in the ranking, just behind overall winner David Amato at Citi) and handily propelling BofA Merrill to No. 1.
Cross agrees with Ghozali’s assessment of the evolution of sales. “The process has changed massively since the 1990s,” he says. “No two days are the same.”
In the specialist lineup BofA Merrill is narrowly outpaced in total positions by J.P. Morgan Cazenove, which also takes top honors for number of first-team positions awarded.
To select the members of the All-Europe Sales Teams, Institutional Investor asked voters in the All-Europe Research Team survey to rank the best generalist and specialist salespeople. The two rankings were created from 1,165 responses from buy-side analysts and money managers at more than 550 firms that collectively oversee some $4.8 trillion in European equity assets.
How much difference does a top-ranked sales team make in a bank’s overall performance? Although that’s always hard to quantify — these banks are massive, global machines — sales does remain a key custodian of relationships with clients, customers, and counterparties. And Bank of America did report its best fourth quarter in years in early January, with trading revenue surging as stock markets rallied just after the U.S. presidential election.
Somebody must be selling something.
