Investire | June 2024

It was clear that the time for paid consultancy would sooner or later strike in Italy too and today we can say that its time has finally come.

This was confirmed by ASSORETI, the Association of Investment Consultancy Companies which, starting from March 2024, has integrated its monthly press releases with the inclusion of the volumes of activity associated with the financial consultancy service for which a fee is foreseen. specific and recurring payment paid directly by the customer for the provision of the service (fee only/fee on top financial consultancy).

There are essentially three reasons why paid consultancy will become an increasingly unavoidable reality.

The first reason has to do with the European regulator. On March 20, the European Union approved a series of amendments to the set of legislative proposals brought together under the well-known and feared Retail Investment Strategy (RIS).

The good news is that after having threatened to ban the incentive-based remuneration system throughout the European Union, the European Commission resorted to more lenient advice and changed the path, indicating new rules and practices to follow.

The objective of the RIS is to encourage cost reduction for retail investors and eliminate possible conflicts of interest. Two watchwords are: transparency and value for money.

If a financial advisor offers a more expensive product, he or she will have to provide reasons. Upon closer inspection, it is not anything so transcendental if we start from the consideration that the principle of the best interest for the customer is not expressed solely on the basis of the cost of the product, i.e. the cheapest product is not necessarily the most suitable for a single customer.

The principle is the same that applies in the provision of any product or service offered to different types of customers; those with more complex needs will pay for a tailor-made service which is naturally more expensive than those with simpler needs that can be satisfied with a standard offer.

Asset managers and distributors will therefore have to differentiate the offer and the related fees based on the different target audience to which it is intended.

The second reason is that paid consultancy is seen with great interest by the wealthiest clients – private individuals and HNWIs – who in 76% of cases declare themselves in favour of paying a consultancy fee in exchange for a professional capable of listening to them and to select solutions characterized by the best cost-quality ratio, the so-called value for money.

On the other hand, less wealthy customers could be induced to invest their liquidity in current accounts when faced with a standard, low-cost offer, overcoming their innate aversion to the costs of financial products (66%). 

The third reason why paid consultancy will spread more and more is because 86% of financial consultants also see it as an opportunity to enhance their work among the segment of the wealthiest clients, but also among those who ask for more transparency.

When the interests of the regulator, in this case the European Commission, of the Investment Advisory Companies, of the financial advisors who work there and of the clients converge in unison, it is certain that the path is traced and the arrival point established.

The consultancy must be paid in proportion to the expenditure of energy, time and costs incurred by the distributor and the professional and the complexity of the client’s needs.

Nicola Ronchetti