Date: 31st May 2021

Monika Dutt, director of European passive strategies research at Morningstar said: “We spend so much time talking about ESG in Europe, but the system hinders investor outcomes,”

ETFs are seen by many industry observers as an ideal retail product, not only because they typically charge lower fees than their mutual fund counterparts, but also because the cost of buying them is not bundled with commission fees to advisers and distributors that recommend them.

The problem in Europe is partly historical because most investors in the region have historically relied on advisers and banks to recommend products and to act as intermediaries. At the same time, most countries in Europe also rely on a so-called retrocession fee model where those same intermediaries receive a kickback fee or commission if an investor buys a mutual fund.

Better Finance said it had repeatedly drawn attention to conflicts of interest in the selection of investment funds by intermediaries and the damage this inflicted on the performances of long-term investments and savings.

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