The Retail Investment Package and its consequences

article by Maurizio Primanni, CEO of the Excellence Group, for the monthly Bluerating.

The Retail Investment Package is certainly a complex measure and will have consequences, some positive, some less so. For this reason, the representatives of the world of European asset management, banks and insurance companies are right to express their concerns and their proposals. I’ll say right away that, in general, my opinion is favourable: on the one hand, this provision supports the original spirit for which it started, that is, the desire to push more European citizens onto the capital markets, catching up with other markets, in particular the US one; on the other, thanks to this standard, the industry has more tools to give the customer both greater value and service. Already the premise of the legislator, that of worrying about and serving the customer’s interest, is a harbinger of important and useful innovations for the sector.

The central element
The authors have not distorted the central element, i.e. that the function of consultancy is to create value for the customer, but this does not contradict the value of consultancy, which must always be based on the protection of household savings, if anything integrates it. The real point is that, for the first time in a strong way, there is a determination to care about the cost evaluation of the products that are sold to the customer. From here on, the perspective changes: in addition to the elements of risk and return, the cost factor is introduced. All of this, if well interpreted, with the due methods and times, can only represent an opportunity and a stimulus for the industry to create further value for customers. Even the introduction of benchmarks should be read not as a reduction but as an improvement. One of the most important characteristics, even if less known of the benchmark, is that it is a formidable engine of transparency both towards the outside, ie the customers, and the inside, ie the industry. By moving towards benchmark parameters, seeing what competitors are doing, the industry will be able to further improve itself. The benchmark also has an inclusive function, so to speak. From the European legislator, who has to model the situations of the individual states, necessarily and historically very different from each other, one can only expect very broad rules. Certainly in a certain sense there is the danger of bureaucratisation, but this does not compromise my judgement: the measure overall seems positive to me. On other points, I share the position taken by the associations representing the financial advisory sector in Europe. I am referring to the further operational burden that measures of this type bring with them.

Notable changes
Perhaps the legislator failed to give birth to the right trade-off, the correct balance between, on the one hand, controls and constraints, on the other, the productivity and efficiency of the industry. It’s not easy: on the one hand, don’t go overboard with the rules, and on the other, don’t expose yourself too much to risks. Like the associations of consultants, I also have doubts about the expected times. When it comes to significant changes like the ones we are talking about, which presuppose operational and behavioral changes to be faced with great care by companies, the deadlines should be more carefully thought out and all the time should be allowed for the best success of the grounding of the new rules.