Markets in Financial Instruments Directive II - And its effect on the principal-agent relationship within financial advisory

Abstract

Through an interview based study this thesis investigates how MiFID II, a new EU directive concerning the European Union’s financial markets, will affect the principal-agent relationship currently present between financial advisors and retail investors. Our sample consist of twelve representatives from Sweden’s major banks, product manufacturers, and consultancy firms, all with a solid understanding of the Swedish financial advisory scene. Our interview results suggest that MiFID II will have a limited effect on the business model of financial advisors, at least in the short-term. However, increased transparency and new product governance requirements will enable retail clients to put pressure on their advisor and align the interest of the advisors to the clients’ interest, thus decreasing the principal-agent problem.