Advice-based distribution channels remain dominant across the European retail fund landscape, according to the European Fund and Asset Management Association (EFAMA).
Its Investment Fund Distribution Channels Across Europe report looked at the distribution of investment funds across 19 European nations, covering assets worth €4.4tn. According to the trade body, the most-important distribution channel was financial intermediaries providing advice to clients, which accounted for four-fifths (80%) of fund assets owned by European retail investors. EFAMA also noted banks have a market share of 45% in Europe, rising significantly to 57% in the European Union.
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“The report underscores the pivotal role of fund distribution channels capable of offering guidance, support and advisory services to retail investors,” said Bernard Delbecque, a senior director at EFAMA. “Ensuring accessibility to these channels without imposing upfront fees is crucial for fostering increased household participation in capital markets.
“Furthermore, the anticipated rise in competition between digital and traditional fund distribution channels is good news, as it will incentivise advice-based distribution channels to evolve, further enhancing user experience and delivering added value.”
The report also found insurers hold a 7% distribution share across Europe, with 9% in the European Union. Focusing in on Denmark and Sweden, EFAMA found 46% and 43% of those markets respectively had been captured by pension savings channels.
Open-architecture platforms
Looking ahead, EFAMA said survey participants anticipated an increase in the market share of open-architecture fund platforms and financial advisers over the next five years. Financial technology is expected to be the primary driver of the evolution of the fund distribution landscape, it added.
The report singled out the technological advances behind blockchain, artificial intelligence (AI), and digital platforms as developments likely to “significantly reshape” the distribution landscape, adding: “The adoption of blockchain solutions is expected to offer numerous benefits, including heightened transparency, reduced errors arising from manual processes, improved security measures and enhanced operational efficiency.”
It continued: “Fintech will also facilitate the rise of digital platforms, streamlining access to investment funds for investors online. This will be reinforced by ongoing advancements in technological infrastructure, such as high-speed internet and mobile networks, user-friendly interfaces and electronic payment systems, all of which will simplify access to fund platforms.”
