More than 40% of the corporate chief financial officers expect to increase the amount of time spent on investor relations in the coming year, according to new research from Greenwich Associates.

Investors are also paying brokers for this access.

In April and May, Greenwich interviewed 91 CFOs at large U.S. corporations. The results of the survey suggest that the typical CFO spends between two and five days per month on IR – 60% of the respondents placed themselves in that range.

“Greenwich Associates research among U.S. institutional equity investors suggests that a growing number of institutions are bypassing Wall Street analysts and going directly to the source when evaluating potential investments and monitoring the performance of portfolio companies,” says Greenwich Associates consultant Bill Bruno. “As part of this process, institutions are seeking out more frequent one-on-one meetings with top corporate officials – especially the CFO – as an intrinsic and integral part of investor relations. It is in response to these demands that CFOs are upping the proportion of their time spent on investor relations.”

Greenwich says its research reveals that, of the $4.5 billion in commissions paid out by institutional investors for equity brokerage research/sales coverage and related service from 2005 to 2006, institutions directed roughly 20% to compensate brokers for setting up meetings with company management. Among the largest institutions and most active institutional investors, payments to brokers that facilitated direct access to management made up nearly 30% of total research commission payments.

Over the past several years, institutional investors have internalized the research function and developed in-house capabilities to tackle much of the analysis once considered mainly the domain of Wall Street analysts, it notes. With their own research and analytic capacities in place, buy-side organizations have less need for the Street’s ideas and recommendations. Rather, they are concentrating on getting in front of corporate management teams to pose their own questions and test their own theories.

“At one point, Wall Street analysts represented the dominant channel for communications between U.S. companies and investors, and their recommendations carried tremendous weight,” says Greeniwch’s Jay Bennett. “Today, there is a widespread belief that the sell-side no longer has quite the same clout to influence the institutional investor base. In part, this is because of consolidation and staffing reductions, as well as the migration of many key analysts to hedge funds or to industry. Hence, CFOs elect to spend more of their time delivering their messages straight to investors.”

Despite Wall Street’s diminished role in the institutional equity research and investment process, the consultants at Greenwich Associates recommend that CFOs think twice before making any significant reductions to the amount of time or attention paid to sell side analysts. “The typical buy-side analyst is charged with covering more than 50 companies,” says Bennett. “Simply collecting the information needed to do a thorough analysis of all these companies is probably a full-time job. When is the analyst supposed to fit in tracking down and setting meetings with management for each of 50 or more companies?”

Rather than trying that experiment, buy-side analysts are outsourcing the logistics of arranging meetings with company management teams to Wall Street. As part of its study, Greenwich Associates asked institutional investors to rank their brokers in terms of effectiveness at providing direct access to company management teams. The results: Lehman Brothers and Merrill Lynch were cited as the firms that delivered the most in terms of face-time with corporate officials.