Cerulli has published its latest annual assessment of the distribution opportunities in the European fund marketplace, which looks at the largest opportunities for global fund managers as they consider the discretionary, advised, and retail markets.

What makes the European market different and challenging is how issues of distribution, advice, transparency and commissions are being tackled at national and the European Union levels, according to the research company.

The report looked at specific aspects of the different markets and the factors driving fund selection, distribution, costs, and expectations of key distribution channels. It also includes the results of an annual survey of European cross-border fund managers.

It found that France’s captive distribution remains dominant, although products are improving and regulatory insight is getting better. Although banks dominate the market share of AUM, fund managers believe IFAs have the highest distribution potential.

In Germany, open architecture is available, but Cerulli believes it is not put to good use, while private banks, IFAs, and funds of funds present the opportunities for third-party fund access. Meanwhile, Italy remains one of Europe’s key markets for international funds and third-party distribution, and institutional investors look favourably at international and cross-border players.

The number of distributors in Spain is being reduced through mergers, which may be good for third-party fund groups. However, the report said selling practices have not materially improved and investors may need a lot more convincing before they rush back into mutual funds.

The U.K. is leading the way in banning commissions from fund sales in the IFA channel. Advisors must cut costs and slim unprofitable client bases to survive. They are outsourcing fund selection and using platforms to ease the administrative burden and strip costs out of new business models, which is promising for third-party fund managers.

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