The MiFID 2 rule requiring advisers to produce detailed annual reviews of investment portfolios from this year end, whether the client wants one or not, is causing some consternation among financial advisers. The detail required means that each review could take several hours to complete with consequent cost implications. For smaller portfolios this might mean the client becoming unprofitable, leading firms to consider only accepting new clients with large amounts to invest. This is another example, it would seem, of poorly thought through regulation widening the advice gap. However, we should never lose sight of the fact that all regulation, no matter how poorly thought through, is aimed at one thing and one thing only, and that is better client outcomes. This brings us back to something we have said many times before. While specific in places, the bulk of regulations are a framework within which we should work to Treat our Customers Fairly and optimise their outcomes. To quote Keith Richards, current CEO of the PFS, “In terms of getting the best outcomes for clients we should consider whether firms are over complying with MiFID rules. We are creating a dialogue with the FCA to make sure this does not happen”. Most platforms are already doing all or most of these reviews. There would be no need to repeat the exercise. So for firms which are on a single platform with charges taken from investment, we believe that all that is required is to refer, specifically and clearly, to the location of the disclosure in the valuation statement. Ideally this could be done in the annual Suitability Assessment Letter.


Where charges are not taken from the investment, it will be necessary to calculate what each client has paid in the last 12 months and disclose this together with the platform charges. We have yet to see whether providers will produce statements to the same date, so the biggest issue may be for advisers whose clients have investments with multiple investment houses and/or platforms with different valuation points. In these cases the calculation could indeed be complex making consolidation an attractive option. Remember at all times though, client outcomes are paramount. Neither burdening the client with long, complex reports he does not want, nor incurring significant extra costs which inhibits the firm’s ability to look after smaller investors, are conducive to good outcomes.


The above is the lead article in our latest monthly News Notes – February 2019. Other topics in this edition include:

  • Funeral Plans
  • Money Laundering
  • Inexpert Prosecutions
  • Review of insider dealing and market manipulation arrangements

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Haven Risk Management : FCA Compliance Consultants