Every European market is unique. Local regulations and interpretations of pan-European directives differ. Fund distribution channels differ. The mix of investments differs. The asset managers and insurance companies providing these investments differ.

European directives – most notably MiFID II – seek to harmonise regulation across the continent, but it’s important to recognise that each country is starting from a different position and is heading in its own direction at its own speed. However, at a pan-European level, some common themes are emerging.

Pressure on fees continues to mount. This is contributing to the ongoing shift towards passive investments, most clearly seen in Switzerland and the UK.

Distributors are also turning away from a dogged acceptance of open architecture towards establishing deeper partnerships with asset managers. The products that distributors want are also shifting. Buying best of breed funds by asset class is giving way to building holistic solutions at the right price. Fund selection is becoming more entwined with cost negotiation.

Finally, the migration towards clean share classes continues; this rate of change is faster in Italy and Spain, and almost complete in the UK (at least for new business). We are also seeing more transparency of who is paying for what across the value chain – prompting the gradual replacement of platform rebates with platform fees across Continental European platforms.

The approach of local regulators has a huge impact on the rapidity of these trends. CNMV in Spain and Consob in Italy seem to have embraced MiFID II with some vigour – spurring changes in business models among distributors and, as a consequence, a faster shift towards clean share classes in those two markets.

BaFin almost seems to regard MiFID II as a first draft (following successful lobbying from banks and IFAs), so there’s been some change in Germany but it has been a good deal slower. These trends are also almost absent in Switzerland, which is not subject to MiFID II, although it does have its own equivalent.

The FCA jumped the gun somewhat with the RDR. The UK is therefore ahead on some of these trends and acts as a Petri dish revealing both the intended and unintended consequences of the regulatory changes.

All of this and more is covered in our latest report, European Fund Distribution: Routes to Market, which will be published next week. For more information contact Jean-Luc de Jonge.