The intellectual property that Morningstar offers through Morningstar Direct, as well as the platform’s robust reporting solutions, are embedded in investment product manufacturing, distribution, commercialization and advisory workflows. Our IP is also embedded in the clients’ investment policies and compliance regimens. As such, we believe that losing access to our IP is as much a source of the stickiness as the technical consequences of switching. Because users have stored their investment lists, screens, proprietary data, model portfolios and reporting templates in Morningstar Direct for years, it can be difficult and costly to migrate to a competitor.
Churn in our core client base is more frequently due to consolidation or restructuring at our clients’ firms and less so because of competitive dynamics, although that does happen from time to time. Generally speaking, however, the stickiness of our business model does have a protective effect against competition.
We decided to evolve the Morningstar Direct framework to the cloud to provide us and our clients with increased flexibility. Morningstar would be able to deliver enhancements to the products on a more frequent, more efficient basis, while our clients would be able to access our content anytime, anywhere