Identifying actively managed funds that don't pay periodic provisions to bank consultants

External question — Personal Finance Stack Exchange Author: maxschlepzig Original post: https://money.stackexchange.com/questions/162803 License: CC BY-SA 4.0 — https://creativecommons.org/licenses/by-sa/4.0/ Adaptation: HTML converted to plain text; contact email addresses removed. In Germany, actively managed funds often pay periodic provisions to bank consultants. This is still legal, but since a few years brokers have to disclose these payments for all funds you have shares of in your account. However, is there also a way to get this information upfront? I mean, learning about this after the fact is better than nothing - but arguably a person needs this transparency before he orders shares of fund in order to be able to make an informed buy decision. Perhaps there is some kind of online database available? Regarding terminology: You can also call such periodic provisions kickbacks. In German, banks and fund managers often call them ' Zuwendungen ', 'Vermittlungsentgelte', 'Vermittlungsfolgeprovisionen', 'Bestandsprovision', 'Rückvergütung' or similar. I'm just interested in periodic provisions. There are also one-time provisions possible, i.e. when shares of a fund are directly bought from the investment company (that actively manages the fund) and that company charges a one time fee for this ('Ausgabeaufschlag') which it might redistribute as a provision to a sales agent or bank consultant.

External answer — Personal Finance Stack Exchange Author: maxschlepzig Original post: https://money.stackexchange.com/a/162817 License: CC BY-SA 4.0 — https://creativecommons.org/licenses/by-sa/4.0/ Adaptation: HTML converted to plain text; contact email addresses removed. In the last years higher German courts accepted argumentation related to undisclosed kickback payments having misled investors, such that compensation claims can be (partially) based on that. Bank consultants and Brokers are thus incentivized to somehow disclose or make it possible to discover any kickback payments when working with a customer shopping for investment funds, prior buy order submission. Sources: a German article on the liability of banks in the context of provisions: Aufklärungspflicht der Bank über Vermittlungsprovisionen , Haufe online portal, 2017-01-11 an article published by a German consumer organization about then recent legal practice regarding investment funds kickbacks and resulting implications: Schaden­ersatz für Geld­anleger: Ersatz für Fonds-Verluste , 2012-02-01 Relevant legislative developments are summarized in an article by the German BaFin (Federal Financial Supervisory Authority): Zuwendungen - Verbot mit Ausnahme: Verschärfte Spielregeln für Provisionen und andere Vorteile (2018, English version: Inducements - Ban with an exception: tighter rules for commissions and other benefits ). Basically, relevant laws and European directives nowadays are the Wertpapierhandelsgesetz (WpHG) and MiFID II, as of 2024. The arguably stricter regulation regarding provisions in MiFID II is effective since 2018 or so. Hence, one way to learn whether a certain fund routes kickback payments to your broker, prior to buying any shares, is to prepare an order for - say - one share using the order mask of your favorite German online broker. Instead of submitting the order you can look for a button that generates an ex-ante cost report, i.e. a listing of all the costs you would experience in case you really submit that order. Such a button might be labeled 'Kosteninformation' (German). As an example, I looked up a few open-end real-estate investment funds, using this online broker order-mask method (table as of 2024-05-31): ━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━ ISIN Name Total-Costs Kickback Fund-Volume Birth ――――――――――――――――――――――――――――――――――――――――――――――――――――――――――――――――――――――――――――――――――― DE0007483612 Deka-­­Immob­­ilien­­Globa­­l 3.79 % 0 % 6.9e9 € 2002 DE0009809566 Deka-Immobilien Europa 2.96 % 0 % 18.4e9 € 1997 DE0009807008 (DWS) Grundbesitz Europa 4.92 % 0.41 % 8.5e9 € 1970 DE0009807016 (Commerz) Hausinvest 3.31 % 0.25 % 17.1e9 € 1972 DE0009805515 UniImmo Europa 1.63 % 0.2 % 14.5e9 € 1985 DE0009805556 UniImmo Global 1.91 % 0.22 % 3.5e9 € 2004 DE000A2DMVS1 UniImmo Wohnen 1.96 % 0 % 4.8e9 € 2017 ━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━ Alternatively, if you are in an offline setting at your bank, you can simply ask your bank consultant for the same documentation. Of course, as always, be prepared to waste some time that way, because a bank consultant usually is primarily a sales person for your bank and thus might want to use that chance to try out all the great new sales tactics he/she recently learned about. A few years ago, the VDH (an association of independent financial advisers) published an online database of periodic funds provisions. As of 2024, one can still find traces of it on the web - but it looks like it was decomissioned some time ago: https://web.archive.org/web/20180830021706/https://www.verbund-deutscher-honorarberater.de/honorarberater-finden/provisionen-investmentfonds/ German article: Skandalöse Provisionen bei Fonds / Kunden zahlen ohne Gegen­leistung , published by Stiftung Warentest, 2015-04-14 - contains a table with a few example funds from that database As of 2024, consumer protection organizations are still pushing for a complete ban of kickback payments in the consulting for financial products - because of the obvious conflict of interest. In 2023, it seemed that the European Commission followed those arguments, but later stopped a reform in that area. (cf. German article by a regional consumer protection organization: Warum Provisionen in der Finanzberatung ein Problem sind , 2023-05-16)