Trying to bring intermediaries in Europe under a single regulatory body would seem to be an impossible task, but more often than not they work most efficiently as part of a licensed network
Which is harder to find - the Holy Grail or a credible intermediary distribution capability in Europe? Readers who have any reasonable experience of European business will quickly understand the tongue in cheek rationale behind the question - if someone is looking for intermediaries in Europe, where do they go to find them?
The countries that form the European Union (EU) comprise a population of more than 460 million. Adding the EU candidate countries increases the total to more than 567 million potential customers.
Since more than 65% of these people have internet access, Europe is considered to be a developed community in terms of the acquisition (or sale) of financial services related products. Given this significant IT usage, there would seem to be a fantastic opportunity, at least on paper, for a serious client-focused internet based offer regardless of any involvement of an intermediary. The financial services industry is also fairly well established throughout Europe and the general acceptance of banks, insurance companies and investment funds as a sensible home for earnings and savings is quite high.
However, offering financial services and even the most basic forms of financial advice via the internet is still very much a developing phenomenon and it is far from straightforward. This may change in the future but the current trend is that many suppliers, and consumers, still tend to look towards intermediaries as the distribution route of choice.
finding an adviser
There are no doubts that every EU member state has its share of intermediaries. They come in many disguises, so the process of tracking them down is not always easy. Since there are 25 different countries, 29 including the candidate countries, this is hardly surprising.
There are independent insurance brokers, tied agents, stockbrokers, tax advisers, asset managers, portfolio managers, investment advisers, financial consultants, private client relationship managers, trust administrators and financial planners. Not to mention intermediary networks and localised broker pools.
Finding an intermediary that a person truly wants to work with is still a huge challenge. European regulations concerning advisers are largely up and running, so it is now possible for every regulated intermediary to effectively 'passport' his home country authorisation to other EU territories.
Naturally, the financial products that he introduces still need to be approved at a local national level, so it remains a significant task for a small operator to learn the market in various countries. The result of this legislation has been to create a largely nomadic type of intermediary that services expatriates of his own nationality on an international basis.
But despite all the latest regulations, there are a large number of unregulated intermediaries operating quite openly in many EU countries and, like it or not, there continues to be a mammoth flow of advice concerning and involving non-EU jurisdictions. The fact remains there is still a phenomenal amount of activity that involves the provision of unregulated advice, even by regulated advisers.
A single market
In most EU countries, there are several regulatory bodies. These are necessary, as they do what they can and are generally good for business. There are also, more often than not, several industry associations representing the interests of intermediaries operating there.
Internationally, it has so far proved extremely difficult to come up with a credible rationale for a truly pan-European intermediary association that is not supported and recognised by the European Commission.
This is something that is needed in the industry and could possibly come about in the future, but intermediaries are often independently active and will need to be persuaded of the genuine benefits before parting with any hard-earned monies for annual fees. It is also the case that many associations, both national and international, are publicly unclear regarding their commercial aspirations and, over time, it is not difficult for intermediaries to spot a conflict of interest when one exists.
It can at times be difficult to break down who does what for who and also, why. It is also commonly felt among advisers that the European Commission wants to see a single market in the financial services arena despite the presence of intermediaries rather than because of their presence.
The structure of the single market, as well as the direction in which it appears to be heading, is perceived by many European intermediaries to actively favour big business over the provision of more localised independent and impartial advice.
The bigger picture for intermediaries in Europe is further impacted by the feeling that each industry body has its own interests and priorities. To build any sort of credibility, a representative grouping has to first state very clearly it is acting in the exclusive interests of its members or the consumers or even the industry or, better still, a combination of these.
This highly palatable start out point normally develops in line with commercial realities. But the speed of development is largely dependent on the individuals in the driving seat. The financial services industry is undoubtedly renowned for attracting, building and maintaining individual egos, so there is sometimes a short-term interest for prominent individuals acting as leaders of their own representative grouping to be just plain unsupportive to wider and deeper industry developments that might be suggested.
This is not so unusual or even surprising but it does not take a genius to work out this makes for a somewhat fragmented industry. This, on top of everything else, combines to play its own special part in holding up and delaying the development of a transparent EU intermediary structure - a structure that might one day enable satisfactory supervision, regulatory involvement and credible self assessment.
And that, first and foremost, genuinely improves the image and role of the EU intermediary. In the meantime, while the representative groupings continue, apparently, to talk and jostle for both position and favour, the lone intermediary has his monthly rent to pay and, for him, it is business as usual.
Most intermediaries who have been around for several years have access to a client base that will allow them to make a living. They continue to seek out direct or indirect relationships with suppliers that will enable them to offer their clients a range of financial solutions. More often than not, intermediaries, even independent ones, work most efficiently when they belong to a larger team.
The biggest challenge for any intermediary is the selection process of working within an existing umbrella operation. The regulatory advantages of belonging to a licensed network or similar grouping are becoming less relevant as individual authorisation becomes mandatory.
Finding an environment that truly brings extra value and a real sense of shared success and belonging is much more critical. The same or similar challenge exists for suppliers seeking longer-term intermediary distribution partners. There are plenty of choices out there and selecting the eventual winners from the eventual losers can be difficult.
Need for a single European financial services association
Lack of support for intermediaries from European Commission
European regulations now up and running
No preferred charging model
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