Analysts call keeps brokerages on toes

Stock option, hefty bonuses and high-value courses used to check attrition.

Domestic brokerages are finding it tough to retain their analysts who have been wooed by rival houses and even business TV channels.

The brokerages are exploring various options ranging from offering performance-linked bonuses to employee stock options to high-value professional courses to retain talent.

As per an industry estimate, there are over 50 brokerage in Mumbai and they employ 900-1,000 research analysts. According to broker Paresh Gandhi of B M Gandhi Securities, research analysts are playing a very important role in the brokerage business as new class of investors seeks transparency and knowledge-based investment decisions.

Riding high on the bull run on bourses, a few top brokerages have given three months' salary as bonus this year. Apart from performance-linked bonuses and traditional festive allowances, some brokerages have come out with innovative schemes such as initiating employees to take up educational courses at companies' cost.

"Thanks to the strong index movement, the overall market investment is going up. So, the brokerages have been increasingly inducting analysts but the supply side is rather weak. The net result of this is a very high attrition rate," said Alok Agarwal, a senior analyst with Motilal Oswal.

An industry source pointed out that some brokerages, listed on bourses, were offering analysts shares under the employee stock option scheme.

A few global brokerages have also joined the trend. Girish Nadkarni, head and chief operating officer, institutional business, ILFS Investsmart, said: "We give stock options and annual cash bonus to our employees."

According to sources, some brokerages that are not listed in India but their parent companies are listed abroad are offering stock options in their parent companies to analysts. Resident Indians are allowed to invest up to $25,000 abroad.

Rajiv Fadke, head HR, Angel Broking, said his organisation believed in improving the skills of analysts. Angel pays hefty fees for six sigma and other courses for its analysts.

"While evaluating annual performance of our employees, we give 50 per cent weightage to competency and attitude. We also train our employees for CRM-customer relationship management. Or attrition rate is half of the industry average," Fadke said.

Normally, there are three levels in the analyst hierarchy. At the first level are fresh MBAs who normally join the industry as associate analysts.

At the senior level, analysts with work experience ranging between three and ten years, whereby the analysts are able to take decisions on their own. Five years back, the entry level salary for an analyst was around Rs 10,000 per month. Now, it has gone up to Rs 30,000.

Dina Mehta, managing director of Asit C Mehta Investment Intermidiates Ltd, said research analysts were rewarded based on calls they gave and revenue generated based on such calls.

"Ideally research should be independent from normal trading activities and should be considered for long term market forecast," she said.