‘Europe won’t copy RDR despite need for change’

According to a 24-page monthly newsletter from Boston, Massachusetts-based Cerulli Associates, the UK’s RDR may have shaped they way fund managers and advisers work, but it is unlikely to bring about change in the rest of Europe.

Referring to the Markets in Financial Instruments Directive II (MiFID II), the study said: “The best bit about MiFID II is about advice and how it is paid for. Countries where independent advice prevails – mainly the UK – lined up with independent asset managers who argued for a level playing field: no commission for anyone.

“But MiFID II makes a clear distinction between independent advice and the non-independent variety that prevails. Non-independents can continue their commission-driven ways.

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“Europe is not a retail market built on independent advice. Most distributors won’t even bother to pretend otherwise.”

The report says the case of Europe flies against the “worldwide transformational change” of the delivery of financial products in the UK and the US.

It said international asset managers have been forced to respond to the new regulatory landscape, evolving distribution channels and the relentless march of new technologies.

Angelos Gousios, senior analyst at global research firm Cerulli Associates, said: “Nowhere is this more evident than in the US, with the rise of the electronic registered investment adviser.

“These so-called robo-advisers are a new breed of start-up that rely heavily on technology solutions, and pose a growing threat to the wealth management segment.”

The research also showed UK growth in model portfolios that sit between off-the-shelf funds-of-funds and fully fledged discretionary offerings.

Fund platforms are also gaining traction across Europe, while direct-to-consumer platforms look set to enjoy the fastest growth of any channel, with the UK leading the way.

Adviser view

Peter Chadborn, founder and principal of Colchester-based Plan Money, said: “It is a positive thing as, up to RDR, the focus in terms of transparency was directed at the adviser, when the cost of delivering a solution is also in the product. Therefore, the fund manager having to look at operating costs is a good thing, as now we are all in it together to deliver more favourable outcomes for customers.”