What threatens to kill off the salesman for good, is a change in European regulation due to arrive in little more than 150 days’ time: Mifid II, a directive designed to increase transparency and reduce conflicts of interest between fund managers and brokers.
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European regulators have written the salesman’s obituary
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From January, an asset manager will still be able to pay for services through trading commissions, effectively using small amounts of client capital to reward a bank for suggesting which stocks or bonds to buy. However, fund managers will have to price each distinct service they receive, and show how research contributes to better investment decisions, meaning it’s not an inducement. Banks will be responsible for identifying what services might count as research, and providing clients with an unbundled breakdown of the cost of research, execution, and other advisory services. Notice what’s missing: how many people are going to stick their hand up and say yes, we really have to write a cheque for my salesperson?
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