Changing with the times Tatton Group Forums Ryan Seaton - - PowerPoint PPT Presentation

Changing with the times…

Tatton Group Forums – Ryan Seaton

2 www.tattoninvestments.com | Tel: 02071902959 | 125 Old Broad Street, London, EC2N 1AR | @TattonIM

Has any aspect of MiFID II been a positive change?

The Lang Cat Survey - 2019

4 www.tattoninvestments.com | Tel: 02071902959 | 125 Old Broad Street, London, EC2N 1AR | @TattonIM

Has any aspect of MiFID II been a positive change?

Yes 45% No 55%

Yes No

The Lang Cat Survey - 2019

MiFID II MiFID II MiFID II MiFID II

Enhanced Cost Disclosure Annual Statement of Suitability Advised Portfolio Switching 10% Depreciation Reporting Client Experience

MiFID II

Ex Poste Disclosure – who is doing what?

Legal Advice Note

DWF Advice Note - Executive Summary

• The enhanced MiFID II requirement to provide suitability reports each time investment advice is

produced and prior to the client's investment decision is a significant administrative and cost burden.

• Similarly, the additional requirements when switching investments, including the provision of a

suitability letter, add further administrative burdens on advisers.

• The RDR rules implemented in 2013 have been extended via the MiFID II inducement rules which

will further limit (if not entirely prevent) advisers from receiving any commission or rebates from product providers in all but limited circumstances.

• There are a number of commercial and risk related considerations which may affect advisers

providing advisory investment services. These include the increased cost of research, the risk of wealth management not being a core activity and providing advisory investment services to an unsophisticated or disengaged client. All of these factors should be weighed up to determine whether the adviser is providing a service which is in their clients' best interests.

DWF Advice Note – Investment Advice

• Enhanced suitability reports each time investment advice is given

Timing of suitability report;

• The suitability report must either be provided prior to the transaction being

concluded (COBS 9A.3.2 (2)) or,

• immediately after the client is bound by the transaction (COBS 9A.3.2 (3)
• The client has consented to receiving suitability reports after the

conclusions of the transaction; and

• The firm has given the client the option of delaying the transaction in
• rder to receive the suitability report in advance of the transaction

concluding.

DWF Advice Note - Switching

• COBS 9A.2.18 – must undertake a cost benefit analysis to reasonably

demonstrate the benefits of switching are greater than the cost

• Suitability letter for each switch
• Pounds & pence disclosure – per client
• Rebalancing – periodic rebalancing requires a suitability letter
• If you haven’t got discretionary permissions you could be acting

unlawfully - without clear instruction to do so from the client

DWF Advice Note – Ongoing Fees

• Ongoing fees can only be received where an on-going service is

provided

• Annual statement of suitability required
• When outsourcing to a DFM, ongoing fees can be received provided

that the adviser is responsible for the ongoing suitability of the DFM service

• Disengaged clients – starting to see the FOS awarding refunds of fees if

a complaint is made about suitability or poor service levels

ONE PORTFOLIO

20 FUNDS. 2 SWITCHES PER QUARTER & A QUARTERLY REBALANCE

4 SUITABILITY REPORTS + 4 COST/BENEFIT ANALYSIS + 4 EX-ANTE COSTS & CHARGES DISCLOSURES + 28 KIIDS + 4 CONTRACT NOTES + 4 EX-POST COST & CHARGES DISCLOSURE + 3 QUARTERLY STATEMENTS + = 140+ PAGES……

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