Investment companies must change the way they pay fees for research from banks by paying for research with their own money rather than taking the payments from clients, according to a study by the CFA Society of the UK.
The research is published amid warnings that regulators are poised to put further pressure on asset managers on the controversial issue of charges, according to Financial Times.
Go deeper with GlobalData
Access deeper industry intelligence
Experience unmatched clarity with a single platform that combines unique data, AI, and human expertise.
The new research by CFA UK, which represents the interests of more than 10,000 investment professionals, found that of more than 350 investment professionals nearly 60% said the current research model does not best serve the investor.
According to the study, more than a third of respondents (37%) think that investment companies should continue paying for research from the banks using the client’s money in the form of commissions while 53% think investment companies should pay for bank research using their own balance sheets.
The report findings has revealed that two-thirds of respondents think investment companies will eventually be forced to stop paying for bank research using client money.
UK regulators have already cracked down on asset managers using investor’s cash to pay bankers and brokers for access to the senior executives of their corporate clients.
US Tariffs are shifting - will you react or anticipate?
Don’t let policy changes catch you off guard. Stay proactive with real-time data and expert analysis.
By GlobalDataThe Investment Management Association is also undertaking a comprehensive review of the market for research and how it is paid and the investors expect that the FCA will issue warnings over the way asset managers pay banks for research on individual companies and stocks performance, reported Financial Times.
One investor said: "The FCA is looking into corporate access. How research is paid is likely to come under the microscope in the coming months."
Will Goodhart, chief executive of CFA UK, said: "It is important that these discussions take place, given that most respondents do not believe that the current business model is in our clients’ best interests, but the discussions need to be inclusive and patient in order to make sure that any move to a new model represents a clear improvement in terms of client benefit.
"Our survey and our September 5 forum on the future of investment research will help us to contribute to the discussions about how the research business model should operate," he added.
