If one believes financial lobbyists, then the world usually collapses if their demands are not heard; SMEs no longer get a loan, savers get nothing when it comes to investment advice. When it recently became known that a request by the Greens to organize investment advice differently and to replace commission-based advice with fee-based advice had actually made it into a traffic light position paper, there must have been a great deal of excitement among the banking associations. The matter would “exclude large parts of the population from access to good advice” and is therefore lacking in solidarity, railed Sparkasse President Helmut Schleweis. The Volks- und Raiffeisenbanken warned of serious discrimination against “broad sections of the population”. The associations quickly published another one for relining study from KPMG, according to which consumers with low and medium investment amounts in particular would be “cut off” from the advice provided by the fee-based advice.
The effort was worth it: Im Coalition agreement In any case, the topic is no longer to be found again – the FDP may have prevailed, which wanted to leave everything as it is. “It’s really remarkable how powerful the banking lobby still is,” says a former bank boss who refused to be named. Above all, the savings banks would have access to all parties thanks to their networking in the municipalities.
Commissions are an important source of income for banks
The move would have been revolutionary for the financial sector. Ultimately, the aim was to replace commission-based advice for private investors with independent fee-based advice. The Netherlands, the Nordic countries and Great Britain have had such a ban a long time ago good experiences in order to. In Germany, however, large sales organizations live on high commissions, which they pass on to customers. In the case of life insurance or securities funds, it is often five or six percent of the total contributions to be paid by the customer. That can be several thousand euros per contract. The result: lower returns and poorer retirement provision.
Every year German life insurers pay around seven billion euros in acquisition costs for brokers, in 2020 it was 7.5 billion euros – and this is the sum that they invoice their customers. Commissions are also an important source of income for the banks – also for the maintenance of their lush branch network. According to study of the analysis house Barkow Consulting, the share of the interest result in the total income of German banks has been falling for years. Conversely, the proportion of commissions rose to 27 percent. In the case of fee-based advice, the customer pays the consultant, just like tax consultants or lawyers. However, fee advice hardly plays a role in view of the competition from the supposedly “free” commission sales.
Consumer advocates have been advocating fee-based advice for years. What the savings banks would call a consultation is actually a sales pitch, wrote financial expert Niels Nauhauser from the Baden-Württemberg consumer center on twitter. It is nonsense to describe fee-based advice as lacking in solidarity. Fees are freely negotiable and can be staggered depending on income. Gerhard Schick from the citizens ‘movement Finanzwende also considers the banks’ arguments to be advanced: in practice, consumers “with a small budget” would sometimes have to pay four-digit sums for a life insurance policy.
In addition to financial advice, the banking associations apparently found a hearing in the traffic light coalition: The three-pillar model, which is associated with a high proportion of state-affiliated banks, should not be touched, which the savings banks welcomed. The easing of the equity rules introduced in the wake of the corona pandemic could also be retained. Also off the table is a “real” European deposit guarantee, which would meet another requirement of the savings banks and Volksbanks. After all, the providers of residual debt insurance have to be prepared for changes. The sale of these controversial products is to be decoupled, which should make their distribution more difficult.