He also notes that the product developers seem to pay little attention to the blends of features that have proved appealing overseas, or in the tax-exempt municipal market. ''Just a little bit of artificial intelligence programming would give them the ability to analyze which elements of a deal are most popular,'' he said. Darst, with a bit more initiative - and a lot more use of computers - the product developers could devise deals that pinpoint even better mixes of old features. They are blends of features - yields, convertability, cost and the like - that have proved popular with investors. Most of the new deals, however, are variations on old themes. Darst counted no less than 270 alternative financing methods.
Darst's ''The Complete Bond Book'' described 65 fixed-income instruments. Last summer, Shearson Lehman/American Express formally set up a ''New Product Development Group.'' And a few months ago Paine Webber hired a vice president from Smith Barney, Harris Upham & Company to head a ''New Products Group.'' Virtually every firm now has a new product think tank. Ever since 1979, when the Federal Reserve Board decided to let interest rates fluctuate more sharply, corporations have been increasingly willing to embrace any deal - and any investment banking firm - that attracts investors away from short-term money market instruments. No longer can the firms count on repeat business. The innovators are stoking the fires of a competitive battle among investment bankers. And they keep tabs on what competitors offer so that they can add new features to a popular bond. They rely heavily on computers to design new types of securities. They hold titles such as director of new product development, and they command salaries that, while not approaching the multimillion-dollar checks that flow to Wall Street's top traders, are far into the six-digit figures. Typically in their 30's, with several years of experience in specialized areas of the capital markets, they are innovating across the whole spectrum of finance. Samuel Hayes of the Harvard Business School. ''There is a special class of investment bankers whose job is to perceive change and exploit it,'' says Prof. Nowadays, there's a proliferation of innovative deals, and a new breed of investment bankers to dream them up. EXCEPT for a handful of financial mavericks such as the legendary Sidney Weinberg, Robert Lehman and Andre Meyer, Wall Street investment bankers were for years wedded to long-term fixed-rate bonds, straight common stock, and a handful of other financial standbys.
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