MiFID II was launched in January 2018 – and while the regulatory regime appears to have been implemented smoothly – Private Banker International (PBI) has found the rules are particularly impacting private banks in three ways: client servicing, fee transparency and client reporting.
Thomas Hofmann, partner at strategy consultants Simon Kucher & Partners, highlights the impact MiFID II is having on client servicing and fee transparency and disclosure, in terms of higher costs to serve/higher time per client ratio and fewer services for non-target clients.
In a MiFID II world, clients have to sign up for an advisory or discretionary mandate when willing to talk to relationship managers.
Hofmann says: “Since the advisory solution offering has not been very sophisticated in the past, banks have had to work on their offering to match it with their client’s needs. This is not straightforward. The best-in-class banks have managed to shift their clients to a scenario of 15% pure execution-only, 55% advisory and 30% discretionary.”
An ABN Amro spokesperson suggests that the directive will accelerate the development of digital solutions as this will provide clients with simpler access to information. Technology will be very supportive in this process, she says. “The need for transparency will furthermore create more awareness regarding costs and fees and as such a natural demand for more low-costs solutions and products.”
Phil Deeks, technical director at regulatory consultancy, TCC, explains that the increased transparency being driven by MiFID II –coupled with the remedies from the FCA’s asset management market study – should create a more competitive market and downward pressure on pricing. “Value for money is clearly a regulatory priority and will not abate in the short term,” he concludes.
You can read a detailed feature on the impact of MiFID on private banks and wealth managers in the May subscriber issue of Private Banker International. Contact Alex Aubrey to subscribe to PBI:
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