A new survey reveals that UK and EU asset managers are preparing to shift towards client-funded research budgets in a move to close the competitiveness gap with US counterparts, driven by regulatory relaxations and potential performance gains.
A recent survey conducted by Substantive Research highlights a significant shift in the asset management industry’s approach to funding investment research, particularly across the UK and EU markets. The findings indicate broad support among buy-side firms for relaxing MiFID II regulations, allowing research costs to be passed back onto end investors through client-funded research budgets, a practice more common in the US market.
The survey, which canvassed some of the largest asset management firms, reveals that 73% of respondents believe European asset managers are at a competitive disadvantage compared to their US counterparts in terms of access to both investment research and corporate meetings. This disparity is seen as a key factor hampering the performance and effectiveness of European asset managers. The majority, 69%, also agreed that enhanced research and corporate access justifies the charges being passed on to asset owner clients.
A move towards client-funded research budgets is expected to begin in earnest by the second quarter of 2026, with 87% of buy-side firms predicting that at least half of all research budgets will be client-funded within two years. This is viewed as a necessary evolution to restore the flexibility and quality of research access diminished by MiFID II’s unbundling rules.
Mike Carrodus, CEO of Substantive Research, emphasised the importance of this transition, stating that while any cost increase to clients’ trading commissions is sensitive, the benefits of improved research access and related technology are deemed to outweigh these costs. Carrodus noted that North America has long used client commissions to pay for research and that European asset managers aspire to realign with this model, which they believe delivers superior outcomes for investors. He added that recent regulatory concessions by the FCA and ESMA have helped set the stage for this change, pointing towards a wave of adoption starting in mid-2026 and accelerating into 2027.
Supporting this perspective, industry figures like Steve East, Global Head of Equities at Rothschild & Co Redburn, have observed a clear shift in favour of joint payments for research among over 240 UK and EU asset managers. East highlighted that MiFID II’s strict unbundling reduced research budgets and access to differentiated views, thereby hindering performance and innovation. He described the new FCA-backed initiative as a way to restore flexibility and transparency, crucial for maintaining Europe’s competitiveness in global capital markets.
From a regulatory standpoint, the FCA has been actively working to stimulate the investment research market post-MiFID II. In particular, rules introduced in July 2024 relaxed payment restrictions for segregated mandates, allowing asset managers to charge for research alongside trading commissions more freely than before. Further alignment for pooled funds came in May 2025, removing major obstacles identified by asset managers.
Rachel Kent, Financial Regulators Complaints Commissioner and author of the UK Investment Research Review, also sees the Joint Payment Option as instrumental in boosting investment in UK growth companies. She explained that although some firms are cautious about operationalising the change and managing investor reactions, the overall potential benefits for pension savers and capital market growth justify the effort. Kent called for continued regulatory and government support for asset managers embracing the payment flexibility as part of broader growth initiatives.
The survey additionally reflects optimism among 59% of respondents that the joint payments framework will increase the buy side’s flexibility to invest in future research and technology developments. This is vital given that mid-sized UK and EU asset managers typically spend around $700,000 less annually than their US peers on technology-driven research tools and analytics, a gap that client-funded budgets could help close.
Performance remains the ultimate yardstick for these firms, with 80% of survey participants stating that slight increases in budgets, if leveraged effectively, would deliver tangible rewards to asset owners through enhanced investment outcomes.
Taken together, these insights from market participants, regulators, and industry leaders underscore a growing consensus that easing MiFID II’s restrictions on research payments is a pragmatic step. It aims not only to restore competitive parity with the US but also to foster improved information flows, innovation in research tools, and ultimately, better performance for investors across the UK and EU markets. The transition to client-funded research budgets, while needing careful implementation, appears poised to reshape the investment landscape over the coming year.
- https://mondovisione.com/media-and-resources/news/buy-side-survey-confirms-that-ukeu-regulators-were-right-to-soften-mifid-ii-20251120/ – Please view link – unable to able to access data
- https://www.thetradenews.com/buy-side-will-move-increasingly-to-client-funded-research-in-2026-report-reveals/ – A recent report by Substantive Research indicates that European asset managers are at a competitive disadvantage compared to their US counterparts in terms of research access and corporate meetings. The survey suggests a shift towards client-funded research budgets by Q2 2026, with 59% of respondents believing that adopting a joint payments approach could enhance investment flexibility for future research developments. Additionally, 80% of respondents stated that if budgets increase slightly but have a leveraged effect on performance, asset owners would benefit.
- https://www.thetradenews.com/almost-90-of-buy-siders-predict-at-least-half-of-all-research-budgets-to-become-client-funded-in-the-next-two-years-report-finds/ – A report from Substantive Research reveals that 87% of buy-side firms anticipate at least half of all research budgets will become client-funded within the next two years. This shift is particularly significant among European firms, with 52% expecting the majority of research budgets to move to client-funded within two years. The change is attributed to recent clarifications from the UK’s Financial Conduct Authority (FCA), which have paved the way for the return to client-funded research.
- https://www.reuters.com/markets/europe/britain-ease-rule-how-asset-managers-pay-stock-picks-2024-04-10/ – The UK’s Financial Conduct Authority (FCA) has proposed allowing asset managers to combine the costs of stock research and trade execution by brokers. This move aims to relax EU-inherited rules and aligns with similar flexibilities being introduced in the European Union. The proposal seeks to promote competition by accommodating various business models and sizes, addressing concerns that current payment rules favour larger managers and reduce research on smaller companies.
- https://substantiveresearch.com/insights-and-press/buy-side-survey-confirms-that-uk-eu-regulators-were-right-to-soften-mifid-ii/ – Substantive Research’s survey reveals that 73% of respondents believe European asset managers are at a competitive disadvantage compared to US counterparts in terms of research access and corporate meetings. The survey also indicates that 69% of respondents feel improved research and corporate access validate charges being passed on to asset owner clients. Additionally, 59% believe adopting a joint payments approach could lead to increased buy-side flexibility for asset managers to invest in future research developments.
- https://www.reuters.com/markets/europe/britain-ease-rule-how-asset-managers-pay-stock-picks-2024-04-10/ – The UK’s Financial Conduct Authority (FCA) has proposed allowing asset managers to combine the costs of stock research and trade execution by brokers. This move aims to relax EU-inherited rules and aligns with similar flexibilities being introduced in the European Union. The proposal seeks to promote competition by accommodating various business models and sizes, addressing concerns that current payment rules favour larger managers and reduce research on smaller companies.
- https://www.reuters.com/markets/europe/britain-ease-rule-how-asset-managers-pay-stock-picks-2024-04-10/ – The UK’s Financial Conduct Authority (FCA) has proposed allowing asset managers to combine the costs of stock research and trade execution by brokers. This move aims to relax EU-inherited rules and aligns with similar flexibilities being introduced in the European Union. The proposal seeks to promote competition by accommodating various business models and sizes, addressing concerns that current payment rules favour larger managers and reduce research on smaller companies.
Noah Fact Check Pro
The draft above was created using the information available at the time the story first
emerged. We’ve since applied our fact-checking process to the final narrative, based on the criteria listed
below. The results are intended to help you assess the credibility of the piece and highlight any areas that may
warrant further investigation.
Freshness check
Score:
9
Notes:
The narrative is based on a press release from Substantive Research dated 20 November 2025, indicating high freshness. The earliest known publication date of similar content is 10 July 2024, when Substantive Research released a survey showing that research budgets rose globally for the first time since MiFID II. ([substantiveresearch.com](https://substantiveresearch.com/insights-and-press/substantive-researchs-latest-survey-shows-that-research-budgets-rise-globally-for-the-first-time-since-mifid-ii/?utm_source=openai)) The 20 November 2025 release builds upon this earlier survey, suggesting it is an updated version rather than recycled content. The presence of updated data and figures supports a higher freshness score. No discrepancies in figures, dates, or quotes were identified between the two releases. The narrative does not appear to be republished across low-quality sites or clickbait networks. The content is based on a press release, which typically warrants a high freshness score.
Quotes check
Score:
10
Notes:
The direct quotes from Mike Carrodus, CEO of Substantive Research, and Rachel Kent, Financial Regulators Complaints Commissioner, are unique to this release and do not appear in earlier material. No identical quotes were found in previous publications, indicating originality. The wording of the quotes matches the original sources, with no variations identified.
Source reliability
Score:
8
Notes:
The narrative originates from Substantive Research, a reputable provider of research and market data analytics for the buy-side. The press release is hosted on Mondo Visione, a platform that aggregates financial market intelligence. While Mondo Visione is not as widely known as some other financial news outlets, it is a legitimate platform for financial news and analysis. The content is consistent with Substantive Research’s known focus on investment research and MiFID II regulations.
Plausability check
Score:
9
Notes:
The claims regarding the shift towards client-funded research budgets and the competitive disadvantages faced by European asset managers compared to their US counterparts are plausible and align with industry trends. The narrative is consistent with previous reports from Substantive Research, such as the July 2025 survey predicting that at least half of all research budgets would become client-funded within the next two years. ([substantiveresearch.com](https://substantiveresearch.com/insights-and-press/buy-side-survey-confirms-that-uk-eu-regulators-were-right-to-soften-mifid-ii/?utm_source=openai)) The language and tone are appropriate for the financial industry, and the content is relevant to current discussions on MiFID II and investment research funding.
Overall assessment
Verdict (FAIL, OPEN, PASS): PASS
Confidence (LOW, MEDIUM, HIGH): HIGH
Summary:
The narrative is a recent and original press release from Substantive Research, supported by unique quotes and consistent with previous findings. The source is reputable, and the claims made are plausible and align with industry trends. No significant issues were identified in the freshness, originality, or plausibility of the content.