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Beyond the status quo: Searching for value in index products is an Economist Intelligence Unit (EIU) report sponsored by Northern Trust Asset Servicing. It is a follow-up briefing paper to our March 2013 executive summary entitled Obtaining value from index products, which drew on a survey of 329 financial industry executives.
Why read this report
Most respondents say they choose a particular index because it aligns with their key business objectives and meets technical requirements. However, a majority of survey respondents (60%) also say they want a brand name that creates credibility with stakeholders and a licensing policy that allows wide dissemination (57%).
Licensing policies are the greatest source of user dissatisfaction. A mere 38% are satisfied with this aspect of index products and only 11% say they are extremely satisfied. Only 30% of index users say they can share data across their organisations without additional fees, and only about one in five can redistribute index data to non-employees.
59% believe that index providers exploit their reliance on them to increase fees for add-on products. Moreover, only 28% of executives say that the index provider they use most is generally willing to negotiate, and only 7% say the provider is willing to adapt product offerings to meet client needs.
Executives that assess their organisations as top performers tend to be heavy index users and tend to be extremely satisfied with every aspect of index products. In most cases, they employ in-house index data experts, are strongly focussed on data quality and take a pragmatic view of brand value, meaning they recognise value obtained from well-regarded brands but are willing to look beyond them.