Trailer commissions in the securities business – counted for a long time, but soon
forbidden?
Cologne (ots) – The impending ban on trailer fees in investment advice –
a topic that banks have been looking forward to with concern for some time. Max Biesenbach
and Simon Grabbe of global strategy and marketing consultancy Simon-Kucher
& Partners explain what a sensible solution might look like:
Trailer commissions are recurring, volume-based rebates from
Fund companies to banks responsible for holding the funds in the portfolio
customers get paid. These inventory commissions make at major banks and
Regional banks in Germany and Austria between 25 and 50, depending on the institute
percent of total income from the securities business. With the introduction of
MiFID II in 2018, the European regulator ESMA increased the pressure for the first time
to this remuneration model, which has so far been relatively non-transparent for retail investors.
This means that the withholding of portfolio commissions in asset management,
where the investor fully delegates the investment decisions to the bank,
forbidden. In addition, this resulted in a tightening of the conditions under
where these commissions may continue to flow into investment advice
which of the investors takes the final investment decision with the support of the bank
meets.
It is becoming apparent that in the next three to five years there will be a renewed
there is a threat of a significant tightening of the framework conditions, which will then become complete
loss of income from portfolio commissions in investment advice
should (keyword: MiFID III). The first pioneer banks have already
completely detached from the collection of trailer fees (in Austria
in large parts, for example, the Raiffeisenlandesbank Niederösterreich-Vienna)
or at least the first portfolio commission-free offers have been set up (e.g
Union Investment with the “Komfort” depot for the Volksbank sector).
But not only the regulator is urging the local banks to act. Also customers
are increasingly making clear demands on transparency and fairness in the
pricing. In addition, both in Liechtenstein (https://www.litilin
k.com/de/blog/rechtslage-in-liechtenstein-on-the-topic-retrocessions-finally-ge
klaert) and the first lawyers in Austria are now filing class action lawsuits against major banks
to the portfolio commissions that the banks have paid over the last 30 years
have withheld to reclaim for customers.
One thing is clear: in the medium term, banks will have to switch from trailer fees to
create visible fees to secure future earnings and pending
legal risks (e.g. a subsequent claim for past retentions)
to contain Otherwise threatens particularly those banks, which today have a strong
Put sales focus on the fund business, the omission of a large part of their
current earnings. But how can a sensible solution look like without customers
upset or even lose to the competition? The success factors are:
Development of a range of offers differentiated according to customer needs:
Advised customers show heterogeneous needs for advice frequency,
different transaction activity, different knowledge and
Experience and different levels of willingness to make financial commitments
risks. These different customer needs cannot go together
the same offer and price model can be used.
Implementation excellence: A customized migration strategy for the
Stock, including well thought-out special conditions for hardship cases, above all
for the affluent/private banking segment, is important. Also
Employee training is essential to incorporate the new strategy into supply and
to be able to sell pricing.
Internal and external communication: It also requires more targeted
Marketing measures that focus on transparency and customer focus
and the new pricing model in direct relation to the values of the bank
to ensure that the change is successful.
What can happen if banks don’t proactively respond to a regulatory
A look at Great Britain makes it clear: When
in 2012 the Retail Distribution Review (RDR = the British equivalent of the
EU ban on portfolio commission) was struck, the big banks lost overnight
much of their earnings and subsequently parted with many
supposedly unprofitable small investors. These have become too big
Parts found a new home with online brokers.
Simon-Kucher & Partners, Strategy & Marketing Consultants: Simon-Kucher is one
Global management consultancy with over 2,000 employees in 27 countries
worldwide that drives revenue and growth for their clients by
their pricing, sales and marketing strategies optimized – long-term and
consistent. With over 35 years of experience in monetization and advise on pricing
Simon-Kucher teams of experts worldwide companies of all kinds and from the
different industries.
We are at your disposal for questions and detailed information
Disposal:
Julia Griep (Public Relations Manager)
Phone: +49 221 36794 486
Email: [email protected]
www.simon-kucher.com
Further material: http://presseportal.de/pm/78805/5343515
OTS: Simon-Kucher & Partners