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May 09, 2016

Mifid II: Fund houses plan to end research charges

EY straw poll shows quarter of fund houses plan to cover research costs themselves

Twenty-six percent of asset managers expect to pay for research themselves, according to a poll of more than 100 asset managers carried out by EY.

The consultancy polled members of the wealth and asset management industry at a meeting at EY’s London office last month, asking attendees which areas of their business would be most impacted by the impending Mifid II regulations, due to come into effect in January 2018.

Among questions covering implementation challenges and costs, operational change and commission sharing agreements, EY asked: will you continue to charge clients in the UK and continental Europe for research?

While the biggest number by far is the 47 percent that remain undecided, the 26 percent that say they will end client charges for research is notable given that, under the EU proposals, asset managers across Europe will have to budget for the cost of research in advance and make clear to investors what they are being charged for.

Nineteen percent of respondents in the EY poll say they will continue to charge clients while 8 percent say they will charge for some research.

The news comes a month after Woodford Investment Management announced it would pay research costs out of pocket as well as giving a detailed fund fee breakdown. The Oxford-based firm is the first in Europe to make such an announcement, but the EY poll indicates that others may soon follow.

‘We are acutely aware that it is investors’ money, not ours, we are investing,’ said Woodford CEO Craig Newman in a company release at the time.

Garnet Roach

Garnet Roach joined IR Magazine in October 2012, working on both the editorial and research sides of the publication. Prior to entering the world of investor relations, her freelance career covered a broad range of subjects, from technology to...

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