For Alan Beaney, investment director at RC Brown Investment Management, the unbundling of commission will heavily favour big fund management houses as they will have privileged access to research at the expense of smaller house who, given the size of their budgets, will have limited access.
“Now, whether that is a good thing or not some people question as the quality of research is quite poor and likely to get worse as stockbrokers are almost certainly going to reduce their research departments.”
A watershed moment
Elsewhere, Gary Waite, co-manager of the Walker Crips Alpha r2 range of managed portfolios, describes Mifid II as a “real wake-up call to a lot of the industry”.
He explains: “The sector is going to see a lot of consolidation because it is not going to be economical for small players to operate in a market where they have to increase the disclosure they make to clients almost tenfold.
“I don’t think it is the wrong thing to do but some of the requirements on asset managers are quite onerous and without scale I do not see how smaller players can adapt to that change without significant investment in their infrastructure, whether it be people or systems or both.
“It is like RDR was for advisers; it is a watershed.”
Waite also believes it could be a shake-up too vigorous for certain advisers, particularly those nearing the end of their careers.
“What if you are an adviser in their late 50s early 60s and in order to remain regulated you have to do a load of exams? If I am in that stage of my career am I really going to do that or am I going to say, ‘It’s been great guys, but…’.”
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