Persuasion and decision making: An investigation into the methods of persuasion used by sell-side broker dealers to influence buy-side asset manager investment decisions pre- and post-MiFID II regulation change in the investment industry.

MiFID II is a series of regulatory changes that impact the financial services industry. For investment banking, it represents more than compliance and transparency rules, it changes the nature of the persuasive communications between financial institutions and institutional investors, namely sell-side brokers, and analysts, with buy-side asset managers. While initial research into MiFID II impact focused on the promotion of electronic trading platforms and monetization of sell-side research, little attention has been given to how MiFID II impacts the persuasive tactics used by brokers to influence manager investment decisions. This study investigates how brokers persuade pre- and post-MiFID II and outlines the impact of MiFID II on those methods.

Using dual process models of persuasion as the theoretical framework, this study examines the use of confidence, source credibility, rapport, and social proof as peripheral routes to persuasion which encapsulate the tactics brokers employ through common channels of communication with managers. This study also examines the use of sell-side research as the central route to persuasion and finds that its use is integral for managers to make informed investment decisions pre- and post-MiFID II. This study finds research quality has increased post-MiFID II, yet production has decreased and serves as the major unintended consequence of the regulation contrary to its aims.

Through semi-structured interviews and a thematic analysis, the specific methods of persuasion are examined as well as industry relationships, MiFID II fears, the use of compliance marketing, and new practices broker use to overcome MiFID II impact. This study contributes to the growing body of MiFID II research and provides a new context to understand financial services marketing using dual process models of persuasion. Findings from this study may help other industries looking at MiFID II as a template for their own industry-wide change.