“Most clients are happy to pay €1,000 for a smartphone but will never pay half that amount to get financial advice.” “A full ban on commissions would create a huge advice gap.” Again and again we’ve heard these kinds of comments from fund distributors across continental Europe. But given the UK’s mostly positive experience with RDR, how much longer can they continue?

A full ban on commissions for selling investment products was initially considered for MiFID II but was stifled years before implementation. Instead, providers and distributors were forced to inform end investors about the costs of their investments in exhaustive detail. The aim was to make end investors more aware of the costs of investing and to mitigate conflicts of interest.

This is the paradox: if distributors argue that MiFID II has done a good job in achieving those goals, the main case against a full commission ban becomes less persuasive. And if MiFID ll hasn’t been effective because investors can’t be bothered to read all the small print, what is the justification for the huge regulatory burden on asset managers and distributors?

The UK’s experience with the RDR can’t simply be extrapolated to continental Europe, which has a much more mixed distribution landscape. A full commission ban would affect the German 34f-adviser market – where adoption of fee-models is on the rise anyway – in a different way to Italian bank-run adviser networks. But the RDR has shown that decoupling adviser remuneration from the sale of products does indeed work in clients’ interests.

We have just published our European Fund Distribution: Routes to Market report. The report goes in-depth into the six largest European markets – the UK, France, Germany, Italy, Switzerland and Spain – and also includes Platforum’s views on the impact of MiFID II almost five years after implementation, the ongoing impact of ESG on fund distribution, the latest trends regarding distribution outside of Europe (Asia and Latin America), and generational wealth transfer. Please get in touch for more information.