Unigestion boss says absorbing research costs ‘the right thing to do’

Unigestion has confirmed it will absorb research costs when Mifid II comes into effect next year, with its chief executive describing the action as “simply the right thing to do”.

The Swiss boutique asset manager joins a number of its peers in the UK and US announcing a decision on how to accommodate the Mifid II rule that requires research charges to be unbundled from execution costs.

US giants such as JPMorgan Asset Management and Vanguard are among those who have recently outlined plans to absorb costs. T. Rowe Price this week confirmed it was following in their footsteps.

Unigestion chief executive Fiona Frick says the firm will continue to use its in-house research in tandem with external providers. 

“It is quite simply the right thing to do to ensure that we continue to give our clients the clearest picture of how and why they are being charged for our products, alongside safeguarding them from any potential conflicts of interest in providing best execution.

“Both our bespoke in-house research and the research provided through external providers are integral to our investment process.”

Meanwhile, Synechron managing director Sandeep Kumar says there are still issues to iron out in the research rules.

“Research unbundling remains a challenge due to no traditional standards for pricing of research, or different types of research, and what can be constituted as research in terms of fees, and record-keeping, especially when information may be less structured in format, such as “research” given over the phone or small sections over email.”

This week it was reported that the Securities and Exchange Commission is nearing a solution to address existing US regulation that regards payment for research as investment advice.