Fidelity International has reversed plans to charge for research under Mifid II after feedback from clients.
The £239bn asset manager revealed it planned to implement a Research Payment Account approach as part of its overhaul of fees, announced in October, when it revealed it was adopting a ‘variable management fee’ model.
The RPA approach involves paying for external research via a budget collected through a research charge to investors.
Fidelity CIO for equities Paras Anand says they initially adopted that approach so that clients were treated equally regardless of whether they fell under Mifid II regulations or not.
But he says “overwhelming” industry consensus has been to absorb research costs, meaning Fidelity investors would face “disproportionate operational and reporting consequences”.
He says combined with the headline reduction in the baseline annual management fee of 0.10 per cent through the variable management fee, Fidelity’s decision to absorb research costs makes it more competitive.
He says: “[The variable management fee] represents an alternative to the flat rate charging structures which dominate the industry, and forms part of Fidelity International’s response to the broader regulatory environment and the debate within the industry around the value of active fund management.”