Mifid II Updates on progress
Jamie_Barnes
Member
Hi everyone,
Now that we're getting roughly halfway into the year, I thought it would be a good idea to put out a quick post to see how everyone is getting on with applying the Mifid II requirements to their processes?
Are firms adopting the rules into their processes smoothly without any adviser kickback? Is there resistance to disclose still from some advisers or firms generally? Are the previously discussed and share spreadsheets still working or have they been abandoned in favour of other tools?
Also, how are firms getting on with implementing the new review requirements, if they have been implemented at all yet?
Has Mifid II made life easier or harder for paraplanners (think I know the answer to this one!)
Finally, has Mifid II brought to the fore just how integral to an efficient, compliant adviser firm paraplanners are now or do you think adviser firms without paraplanners could still cope on through?
Cheers
Jamie
Comments
The only thing that is really bugging me in terms of the review requirements is the ex post calculation of fund charges paid. Basically because it's impossible, or at least completely impractical and the cost of doing it far outweighs the value to the client.
Charges calculations in general for ex post are a lot simpler on paper than the reality. I'm actually using time and money weighted return formulas regularly now, which makes the revision I did on them worthwhile.
Other than that, I quite like the annual suitability assessment as it forces a lot of standardisation into an otherwise vague process.
One of the areas that is being debated in our firm is whether we need to provide a detailed breakdown of fund charges (ie TER/OCF + transaction + performance) in the on-going suitability/review letter. We do this for new recommendations but have been advised only the aggregate charge needs to be re-stated (for ex post purposes) at review. I'd be interested to know how others are approaching this.
In our ex-ante disclosure, we currently do a detailed breakdown, but I am looking at changing this to a summary. In our ex post disclosure, we are definitely going to provide a summary (investments/advice costs, combined product costs, tax) but can quite easily get the more detailed breakdown if a client requests it (as we are required to.) I doubt many, if any, will.
We have been using Transacts illustrations which gives us the charges in pounds and pence, we then copy this over into our annual review document.
Although transacts illustrations are a projection, we confirm in the doc that this is the case and charges could go up or down where they are based on a %. My understanding was we are projecting the charges for this year and then from 2019 it will need to be confirmed what has been taken? I may be completely wrong and am well open to guidance on this.
Also not to hijack the thread but how many on here work for a firm that have advisory permissions, as opposed to discretionary? I am led to believe as an advisory firm we now need to provide some sort of suitability letter when re balancing a clients portfolio back to the recommendation asset allocation.
any thoughts much appreciated
To clarify before MIFID II, rebalances were done annually for our clients at the review meeting, as part of the agreed investment process.
Ongoing suitability - fine. Charges - impossible to do this efficiently for the legacy book of business we have.
Thanks for the responses. Yonkers - my understanding is that you are right; if you don't have discretionary permissions you would need to cover suitability for each fund switch/rebalance.