Broker Consulting, a.s.
former Deputy Chairman of FECIF
Yet another regulatory myth explained
Nobody in the financial industry could have missed how notable the attention has been in all recent regulations paid to the conflict of interest and its mitigation. All those MiFIDs, IDDs, MCDs and other Directives, have substantial parts dedicated to so called “inducements”. This is a euphemism for preventing the advisors (distributors) from taking too much money that would skew their advice and recommendation to clients. Because even a little kid knows that those essentially undesirables in the financial world (we love Fintech!) will recommend even the worst product with the highest commission, right? Wrong.
As with many presumptions of current consumer protection dogma, this cliché has very little empirical backing. Considering investments, as the most observed segment, even scholarly literature is deeply divided, as to whether higher commissions lead to worse advice or not. Seeing this and the huge costs incurred by the colossal inducements’ regulation, I decided about two years ago to take a look at the situation in Central-Eastern Europe. That “wild East” of the European Union, which is not empirically mapped at all. So, what was our journey and what have we found?
Our research, which will be published in a few months in...