MiFID is a comprehensive legislation. After overcoming the challenges and thinking you had time to breathe, MiFID II was published in 2010. It’s a game-changer as increasing regulation makes investment advice more complex than ever before. Since our clients are all affected by the tightening regulation in one way or the other, we’ve spent quite a lot of time finding ways to work efficiently in the new environment and how to tackle the challenges of tightening regulation in your business.
Some might have just pushed it away to be handled in the future, but now it’s starting to be the last moment to face reality – MiFID II is coming in January 2017. It means even more complexity in the areas of customer service, transparency and documentation. For example, the pricing needs to be more transparent and financial advisors need to record every interaction with the customer. In the future, the advisor needs to stay connected with the customer regularly and ensure the solution is still suitable for the customer’s current situation. You have to know your client and be able to prove it.
» EU law that provides harmonised regulation in investment services for the member states in the European Economic Area
» The main purpose is to improve consumer protection and increase competition in investment services
» Effective from Nov 2007
» MiFID II will be effective from Jan 2017
The importance of an efficient sales tool
MiFID II is about to raise costs in the investment advisory business by increasing the workload and adding requirements to the software used in the customer interface. With our sales tool, you’re able to beat the complex regulation set by MiFID II:
- The sales tool ensures that the investment advisor goes through every required point in the regulations with the customer.
- According to the customer’s investor profile, the sales tool finds the best solution for the customer.
- Documentation is created automatically based on the collected information.
- The discussion with the customer will be saved to the CRM simultaneously.
- You can serve customers individually but effectively when you have all the information at the same place.
From commissions to a closer relationship with the client
The expected ban on commissions will have a significant impact on how business is run, and in countries such as Sweden, we can already see many firms preparing for the new environment. Rather than earning kickbacks and commissions, the future is to get a closer relationship with the client. This is done by offering discretionary asset management, offering own funds, or becoming a custodian. FA can support your endeavours in these areas and keep the new administrative tasks as easy to use as possible. This is done by setting up the FA platform with as much automation as possible and integrating it with the leading third-party service providers related to trading, settlement, rates and static data.
A setup of FA for discretionary asset management and fund management provides you with the benefits listed below, to name but a few:
- Easy reporting to authorities, such as tax reporting, transaction reporting and fund reports
- Fee calculation, including accrued fees
- Automated trade order management, including possible DMA connectivity
- Model portfolio management, including individual choices for each client
- Easy to manage client relationships and documentation of given advice and related costs to the client
Preparedness for MiFID II in the Northern countries
Presented aspects are based on our discussions with over 100 decision-makers in the financial industry, lawyers and compliance officers.
On a general level Swedish banks and asset managers woke up early enough and they’re starting to be ready for MiFID II.
Most of the banks and asset managers have started at least planning on how to face MiFID II but there’s still work to do before the execution in Jan 2018.
Especially the banks in Denmark have hired consultants to understand the scope of MiFID II and how they should start preparing for it. They still have a lot of work ahead before the execution of MiFID II in Jan 2018.
MiFID II will cover all of the EEA member countries including Norway, Iceland and Liechtenstein. It’s still a bit unclear how they will react and operate in the tightening EU-regulatory environment.
How to approach MiFID II in a financial sales organization with us
– Identify the right experts in your firm to take a view on the MiFID issues related to your operations.
– Assign a key person to create communication and form a common view on the issues across front, middle and back-office functions.
– Find a way to engage your internal working groups in other (MiFID and non-MiFID) workstreams.
Gathering more information and training
– Get in touch with FA to register your interest in consultation and attending our sales and MiFID II related seminars.
– Prepare your employees for MiFID II and the changes that needs to be decided, e.g. how products and services are classified by risk.
– Define new methods of discussing issues and recommending global solutions across your offices and other firms.
– Brief your senior management on the cost implications on the budget.
– Discuss with your product managers how they can help you.
– Are your firm’s products and services structured and defined as the directive requires? We’ll help you with this.
– Establish a working group with us and conceptualize tangible examples of the outputs.
And you're done!
– Note that the final deadline is January 2018.