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Pricing of investment advice under new regulations regarding distribution fees and the increased role of online services

Noeverman, Marcel (2013) Pricing of investment advice under new regulations regarding distribution fees and the increased role of online services.

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Abstract:New upcoming regulations have a large effect on the revenue models of investment advice providers. Distribution fees will be prohibited in 2014, and advisors will only be allowed to accept payments from clients. Businesses in the industry are currently looking for ways to replace the indirect distribution fees with direct advice fees. The aim of this study was to advise ABN AMRO, one of the largest players in this market in the Netherlands, on the level of these new advice fees. Using historical transaction and depot data, the impact of different pricing scenarios on revenues have been estimated. Also other criteria have been taken into account, like individual client impact and competition. The analysis finally led to a new pricing model. Without taking into account client migrations, the new pricing model is estimated to be approximately revenue neutral. Moreover, the proposed new pricing is understandable, transparent, competitive, and more closely related to value and costs. Although the exact impact of the new pricing model on individual clients depends on individual client circumstances, higher value added taxes probably will increase prices for clients on average.
Item Type:Essay (Master)
Clients:
ABN AMRO
Faculty:BMS: Behavioural, Management and Social Sciences
Subject:85 business administration, organizational science
Programme:Industrial Engineering and Management MSc (60029)
Link to this item:http://purl.utwente.nl/essays/63408
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