Briefings and Training on MiFID
The problem with MiFID is not so much the rules but the changes in behaviour that are needed in some sectors to see customer management as the priority rather than portfolio management.
To appreciate the underlying intention of MiFID you have to go back to the Directive and it’s intention to ensure that clients can rely on providers to ensure that the advice given to them, and the decision made on their behalf are suitable are
appropri
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MiFID is with us to stay, those that see the benefits and seek more information from clients will be the winners.
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ate to their:-
 circumstances,
level of knowledge and experience, and
that they can afford to take the risk involved
This has long been the case in the UK when giving financial advice with extensive information gathered to evidence that the advice given is based on real facts about the customer’s financial circumstances. The current rules were heavily enforced in this sector by the regulator.
Private Client investment managers, particularly those exercising complete discretion on behalf of their clients have been lightly touched by this regime. They do have some information about clients, usually driven by the need to “Know your Customer” and the money laundering requirements. The range of information required under MiFID in three critical areas is not complete.
Investment managers sometimes see their role as managing the performance of the portfolio rather than the relationship with the client. This is compounded by a reluctance to ask personal questions seeing them as intrusive and innappropriate. For example:
“I cannot ask what a customer earns, why would I need to know?”
"I know my customers – the information is in my head and I would be embarrassed to ask the information after all this time"
“This is all irrelevant what matters is whether the portfolio performs”
Whether we like it or not, evidencing that this information is held and, as importantly, is reflected in the way the portfolio is managed, will be an area for focus for the FSA post 31st October.
How we can help
Speak to Jayne Owen on 01327 858292 or email jayneowen@ctp.uk.com
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