As fund managers and research providers tussle over the cost of research under new European rules, some wealth managers are resisting the idea of paying anything at all.

The MiFID II regulations are “just another way of taxing people,” said Hilmi Unver, who heads the ultra-high-net-worth and family office unit at Geneva-based wealth manager Notz Stucki & Cie. If an asset manager tries to pass on research costs “we’d drop the fund. There’s no reason to pay more.”

With MiFID II requiring asset managers to pay for research separately from broking services from January, it means for the first time they will have to decide who pays for the research that helps them make their own investment decisions: the fund manager or the end investor.

“They know it wouldn’t be appropriate” for asset managers to pass the costs on, David Bellamy, chief executive officer at wealth manager St. James’s Place Plc, said in a July interview. It will become a “cost of doing business rather than charging it on to us or to clients in any way, shape or form.”

Investment managers must either pay for analysis out of their own profit-and-loss accounts, meaning they absorb the cost themselves, or through research payment accounts which are passed on to the client. St James’s, which oversees 83 billion pounds ($106 billion), expects most of the funds to which it delegates management to absorb the cost of research.

Some asset managers have already decided to absorb the costs. U.K. asset managers Baillie Gifford & Co., Woodford Investment Management Ltd., M&G Investments and Jupiter Fund Management Plc, which between them manage more than $540 billion, said they plan to pay for research out of their own profits. On Monday, T. Rowe Price Group, the U.S. manager that oversees $927 billion in assets globally, said it will pay for third-party investment research used by its U.K.-based investment managers.

Geneva-based investment adviser Fundana SA, which oversees $1.1 billion, will pull assets from its underlying hedge fund managers if they attempt to pass on any additional or higher fees, according to Dariush Aryeh, chief investment officer of the firm’s fund of funds.

Not only are we not going to pay additional fees but we are making sure they come down,” Aryeh said. “The whole industry has to rethink its fee structure as returns are not stellar anymore.”

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