Financial transactions in Germany should primarily be conducted via fee-based consulting. This protects the customer and would finally lead to better products.
The payment and banking scene is undoubtedly never boring. Not a month goes by without new products, banks, fintechs and payment solutions coming onto the market. But who really needs all this and do you have to find it all good? Our author Nils Wischmeyerilluminates in his column “Nils nagging” from now on monthly a product, topic or just the “last hot shit”. After all, there is (almost) always something to complain about.
Examples of bad advice are lacking in der Financial sector not. Starting with expensive mutual funds and nonsensical insurances up to the Lehman certificate for pensioners. At the end of a loss-making investment, consumers always have the same question: Why did my advisor recommend this to me? The answer is simple: the financial industry lives from commissions that it receives, for example from investment companies, whenever it sells a product. Regardless of whether it suits Steffi or Stefan well or badly, regardless of whether they put money in the sand or are threatened with total loss: the advisors earn thanks to commission business.
But this incentive is wrong, leads to bad advice and a loss of confidence in the financial sector. Commissions should therefore be prohibited and fee-based advice should be the means of choice – state-financed. The federal and state governments could pay for the first or even second consultation, for example, on the grounds that this would give citizens more financial freedom in the long term. In addition to this, customers could grant their advisors a kickback or a commission in the long term if everything goes as planned or promised;
Sounds bad, counsellor dear? One way or another, it may come soon. The head of the European Securities and Markets Authority (ESMA) Steven Maijoor recently said in an interview with FundsProfessionalFor example, the problem with commissions is “that recommendations of financial products in the commission model are by no means always in the best interests of the customer.
ESMA is therefore also considering whether a Europe-wide ban on commissions would not be appropriate. If this view were to prevail, it would lead to what the German financial sector is avoiding like the devil to holy water: fee-based advice. Criticism is inevitable: Who should pay for it? How are we to cope with the expense? And who is going to afford it?
The financial industry itself is to blame for the discussion
The fact that such a duty has to be discussed at all is the industry’s own fault, as it has gambled away confidence in recent years in search of more, more and more returns. The excesses of the sales department before the financial crisis certainly contributed to this, but even since then the advice is often mediocre at best and very limited to what the local sales department gets a nice commission for. If the industry were to offer very good advice that would also bring investors and savers a stable return in the long term, the ESMA boss would not consider a ban for the whole of Europe.
By the way, fee consulting is not a downfall. In Great Britain or the Netherlands it worked quite well without ruining the financial centre. In a Study the FCA after the implementation in Great Britain it is said that consultants “above professional“In addition, fees for retail products have fallen and the market has become more consumer-oriented. Or, as it is also said, “those consumers who now receive comprehensive advice” would probably receive a better quality of advice due to the “better qualifications of advisors and the reduction of product distortion”.
A consulting gap is not a problem
With the Quirin Bank, there is at least a bank that also does quite well in this country, even if one needs the necessary change in order to invest one’s money there at all. And, of course, it is by no means certain that consumers are prepared to pay a few hundred euros just to be advised. This is new, and consumers are not used to paying for a service that was previously supposedly free.
“It is far from certain that the consumer is willing to pay a few hundred euros just to be advised.”
The great fear of the worried consultants: there will be a gap in consulting. And yes, it is true that customers often refuse advice when it costs hundreds of euros per hour. Some because they cannot, others because they do not want to. The fee consultation is often not more expensive than the commission consultation – the costs are only suddenly noticeable. Exactly here the state should intervene accordingly with subsidies and the new commission model should seize, which rewards if the customer is happy – and not the product offerer.
Fee-based consulting is an opportunity for the industry
Instead of complaining, the industry should see a possible commission ban as an opportunity anyway. They can finally rebuild trust by no longer selling customers the product that is best for the financial institution, but what the consumer really needs. A small boost in confidence would be just what most financial institutions need – wouldn’t it?
