MiFiD II Research – Allianz GI in talks over Unique Deal

Allianz Global Investors has not yet paid for research it consumed in the first quarter of 2018 and will negotiate the cost with providers this week.

The firm’s CEO Andreas Utermann revealed that unlike most other asset managers, Allianz GI has not entered into agreements with any sell-side firms to pay for research, and will now negotiate the cost for the research it has consumed during Q1 this year.

It comes after a warning for asset managers from Edinburgh-based Electronic Research Interchange (Eric), which was founded in 2014 by former Standard Life Investment directors Russell Napier and Chris Turnbull.

Turnbull pointed out that before Mifid II was implemented at the start of this year, fund firms generally did the minimum to comply with new unbundling rules to meet the deadline, adding that a number of firms are set to discover ‘they owe more for research than they have anticipated’ and are ‘not paying for it in the way the FCA intended.’

But Utermann denied his firm would be in for a shock and said: ‘There is a big discrepancy what the big banks want for research. Some say ‘you can have all this [research] for $10,000’ and others say you can have it for $2 million.

‘We’ve consumed the research we need to consume, and we’re in the process of trying to gather all this info – we’ve clocked the hours with analysts, etc… – and determine what we think we should be paying… If we’re wrong, fine, we’ll have another think… we’ll agree the costs afterwards.’

Utermann added that he believes there ‘needs to be a price discovery in the market’ to uncover the true value for research.

Most asset managers made agreements for the price of research with sell-side providers before the Mifid II deadline.

However, Turnbull said that asset managers that negotiated a basic price for written research may be unaware of the full costs associated with broker interactions they previously took for granted, with ‘invoice shock’ catching up with them as they slowly wake up to the true price of broker insight.’

But this was also denied by Rathbones Unit Trust Management CEO Mike Webb, who previously told Wealth Manager his firm is ‘certainly not expecting a shock’.

Webb pointed out the process to prepare for the new rules under Mifid II involved determining what research the fund managers and investment managers throughout the group actually used and what value they attached to it, with the group then entering into negotiations with those houses that added value.

See full article here