If your organisation has assets that are invested directly with an investment manager or via a financial adviser, it should understand how it is impacted by MiFID II.
This legislation reinforces the original MiFID regulations which were introduced in 2007. The primary purpose of MiFID II is to provide clients of financial advisers and investment managers greater information and transparency, including more comprehensive costs and charges disclosures. This is because financial advice charges can often be perceived as complicated by clients.
Key areas of change:
Information about services and investments
There are requirements on firms related to the level of information they must disclose to a client. This relates to the type of advice the firm provides, their product range and relationship with providers.
Periodic assessment of suitability
A firm must confirm whether they will provide a client with a periodic assessment of suitability.
Aggregated information on costs and charges
Firms must disclose initial (ex-ante) and ongoing (ex-post) aggregate costs and charges to clients. The cumulative effect of these costs and charges on the return on investments should also be provided in the form of an illustration.
Conflict of interest
Appropriate steps should be taken by firms to identify and manage instances where conflicts of interest may arise. These should be prevented where possible, however if they should occur full disclosure should be provided to the client. The client experience should never be detrimentally affected by a conflict of interest.
Is your organisation getting value?
Cost is not of course the only consideration and ultimately the outcome achieved relative to your organisation’s objectives is most important. However, paying more provides no guarantee that your organisation is getting or will get a better outcome, so it is important to review and benchmark what your organisation is being charged against alternatives.
These wider requirements financial advisory and investment firms now have to adhere to should benefit charitable organisations if they actively engage with the available information.
If you feel that your organisation’s current arrangements would benefit from an independent review, please do not hesitate to contact us on 0345 3578910 or email us at firstname.lastname@example.org. We offer a free no obligation initial consultation.