The support and financial advice provided by banks to savers has improved since 2018, but shortcomings persist, particularly in terms of information relating to the costs and risks of financial investments: these are the conclusions drawn by the Autorité financial markets following a new mystery shopping campaign conducted from June to October 2022 within the eleven major banking networks.
To assess the quality of the advice and the nature of the products marketed by French banks, more than a hundred meetings were conducted by the AMF with the branches of these establishments, with two types of customer profile – the the first “risk aphobic”, and the second “risk aficionado”, with higher incomes and assets.
#Protection investors: the AMF publishes the results of its new campaign of mystery visits to branches to observe market commercial practices. >Find our findings here?? https://t.co/22qSq5d0QI #Saving #MIF2 pic.twitter.com/cRm3vpaWrY
— AMF (@AMF_actu), through Twitter
The mystery visitor was an individual looking for investment advice following a donation of 50,000 euros, with the aim of enhancing his savings over the next ten years, and mainly to be used to prepare for his retirement.
Collection of information: a legal obligation
Before delivering their advice and directing savers towards financial investments, banking and financial advisers have a legal obligation to collect information on their experience, their knowledge of financial products, their financial situation, including their ability to sustain losses “, their investment objectives ” including their risk tolerance ”, and since more recently, August 2022, its preferences in terms of sustainability. Information that is collected in particular through questionnaires.
At the end of its mystery meetings, the AMF notes that overall, the collection of this information was ” quality », « with a listening advisor », and that compared to the last survey carried out in 2018, the analysis of the financial situation has been more thorough. In contrast, the point on financial experience and knowledge is “ too infrequent “. ” Nearly half of advisors asked prospects to self-assess their knowledge, which is not acceptable “Points the authority.
Life insurance and real estate, main investments promoted by banks
In terms of the financial products presented, the most recommended solutions were life insurance (two thirds of the cases), with, most often, a proposed breakdown between funds in euros and units of account. Securities accounts and PEAs were offered in just under one out of two cases, and the PER in three out of ten cases. In terms of investment vehicles, advisers first highlighted real estate investments, almost entirely in the form of SCPIs, “ about as much to risquophobes as to risquophiles “.
In a context of a sharp market correction last year – particularly in the 1st half – equity funds were promoted significantly less than in 2018 (the number of proposals to risk-loving visitors fell from 30% in 2018 to 10 % in 2022). Another notorious fact: ETFs and investment capital funds (private equity) were almost never offered, while “SRI” fund proposals only concerned 5% of mystery shopping.
Less than one in two advisers addresses the issue of fees
Main pitfall raised by this campaign: the costs. These were only presented in half of the meetings, and a little more frequently (six cases out of ten) for those relating to PERs, securities accounts or PEAs. When they were presented, the terminology used appeared clear and understandable to mystery visitors “.
But not all types of fees were presented in the same way: entry fees were more frequently discussed than annual fees and exit fees (the latter were only mentioned in 11% of 12% of appointments). Finally, in two out of three cases, no document was submitted concerning these elements.
And in only one out of ten cases, an adequacy report was submitted at the end of this meeting. However, the AMF points out that this document is mandatory in an advisory situation, ” i.e. when the professional recommends investments “.
The findings of these mystery shopping will be presented by the AMF to the institutions visited so that they can improve their practices accordingly.