Europe is a highly diverse continent – this maxim also applies to fund distribution. There has been a dramatic increase in cross-border sales in the past decade, and MiFID II has been introduced to harmonise regulation across markets. However, the implementation of MiFID II seems to be accentuating differences between countries rather than bringing them together. For asset managers, a tailored approach to distribution remains crucial.
Discrepancies between countries appeared as soon as the directive was implemented into the national law of individual countries. Compare the tough stance taken by the Spanish regulator with the one taken by the BaFin in Germany, which has been much more accommodating to lobbying action from local groups.
MiFID II is also having unexpected effects on individual distribution channels, making disparities in market structure and internal dynamics even more apparent. In Italy, adviser networks – most of them controlled by large banking groups – are thriving, very much to the dismay of fee-only advisory firms. In Germany, independent wealth managers are managing to attract new money despite facing a higher regulatory burden. In Spain, a highly concentrated banking sector is increasingly looking into the sub-advisory route.
COVID-19 is also highlighting local idiosyncrasies. In Germany, the pandemic has sparked a sharp increase in demand for direct-to-consumer services, while in Italy it is making human advice even more relevant.
The growing importance of ESG appears to be the one issue where there is consensus across all key markets.
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