River and Mercantile Asset Management is the latest firm to announce it will absorb the cost of fund research under the Mifid II regulations.
The asset management firm announced this morning (19 December) that, once the new regulations are implemented in January, it will join firms such as JP Morgan Asset Management, Artemis and Aberdeen Standard Investments in paying the costs of external research.
Fidelity is one of the more high-profile firms to say it will pass research costs onto clients. It said it is doing this because its has clients in many different countries, including jurisdictions where the regulations do not apply, and so to absorb the costs would disadvantage investors in certain geographies relative to others.
James Barham, head of asset management at River and Mercantile said: "Historically, the external cost of research has been part of the total cost of investment reported to clients and has been segregated and budgeted by provider.
"Under Mifid II we will continue to manage and monitor external research providers in a similar manner.
"However, after a period of consultation with our clients we have decided that, effective from January 2018, the cost of this external research previously charged to clients will be absorbed by the Group.
"The estimated annualised cost of this change is expected to be £1m to £1.5m, however this will be offset in part by a reduction in remuneration expense, leaving a net impact on profit of £0.7 to £1.1m. We believe this is the most appropriate course of action to support the strong competitive position of the business."
