The distribution of funds is changing in Italy, highlighting the role and definition of independent advisers.
Despite the claims coming from independent financial advisers, advisory services from banks have been reshaped in recent years as they respond to rules dictated by the RDR and Mifid I and II.
Mauro Albanese, commercial director at FinecoBank, says: “Conversely to the UK, the level of independency for financial advisers is not homogenous. At FinecoBank, for instance, we distribute third party products, but we also allow our project finance advisers (PFAs) a certain margin of independency which is conflict-of-interest free.”
As part of its advisory arm, FinecoBank provides also a fee-only service, called FinecoAdvice, which offers PFAs a salary system aligned to RDR objectives.
“Moreover, new rules coming into effect in line with Mifid II will oblige intermediaries to specify to the client whether the type of advisory service they will provide will be independent or not. The industry will have to educate its clients in practice, by appointing new adequately trained staff,” Albanese says.
Regulation seems to be the solution banks’ financial advisers point to when they have to protect themselves from the conflict of interest argument. Massimo Giacomelli, responsible for financial advisory services at Banca Monte dei Paschi di Siena (MPS), strongly opposes the conflict of interest argument by saying that “the rules exist to regulate it; it’s all about applying them.”
Giacomelli, who has been working for MPS for the last 13 years, says that conflicts of interest can be avoided by simply following the rules set by Mifid and by adopting an “open architecture” structure.
“At MPS 78% of the products we allocate are others’ and 22% are our core products. It doesn’t make sense trying to shift financial advisory services only to independent advisory firms. As a matter of fact, banks have a higher bargaining power and put clients in touch with the greatest investment groups around the world,” Giacomelli says.
A new relationship
According to Giacomelli, Mifid II will help create a new relationship between intermediary and adviser, as well as reshape the role of advisers and their own relationship with the client.
“I believe the job of financial adviser is undergoing a huge change in Italy at the moment, and I also think the industry will be forced sooner or later to adopt the American model, where advisers work in teams rather than individually and invest heavily in their own education, as well as in that of their clients,” he concludes.