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MiFID II and GDPR IFA – Preparing for Change
December 12, 2017
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From 3rd January 2018, the updated Markets in Financial Instruments Directive (MiFID II) will come into force across Europe. These changes are believed to be the greatest reforms to affect the financial services industry for some time. The changes are intended to make the financial industry fairer, safer and more efficient. For more details on the changes, click here.

The main changes Financial Advisers are likely to respond to are:

  • The need to notify clients when their portfolio falls 10% or more below
  • Providing a breakdown of the proposed costs and charges

So, with this in mind, this blog is going to look at how marketing can be used to help your firm deal with the changes. In particular managing the proposed costs and changes. Your priority from a marketing perspective is to ensure your firm is always presented in a positive light. This means that clients need to be sure they understand that the changes are the result of new legislation, why the changes have come into place and that they feel assured you are capable to manage the changes.

The need to notify clients when their portfolio falls 10% or more below

The MiFID II requires for clients to be informed when their portfolio falls 10% or more since their last report. Financial advisers must do this within 24 hours. This could be difficult depending on the channels of communication you typically use. Look at which channels are currently being used? Is it possible to introduce text messaging or emails to ensure a quicker notification?

Providing a breakdown of the proposed costs and charges

Another change in the MiFID II is that clients must receive a breakdown of all proposed costs and charges involved for investments. It may be that your firm already provides the total account cost for their services but you must be sure that the breakdown includes the fee, VAT, total underlying fund cost and charges, stamp duty and transaction costs. Below are our tips for using the changes to optimize your marketing:

Add value

While you will need to inform clients of the changes, it also gives you the opportunity to highlight the value of your services. For instance, rather than just meeting your obligations get to know your client in a way that you fully understand their situation and therefore other services which may be of use. Talk about how your services add value and think of it from the client’s perspective. So, rather than just reeling off a list of charges for each one we would suggest explaining the benefit this gives your client.

Client communications

Think about how you are going to update your clients and make sure they understand the implications. You must see this from the perspective of your clients. This information should be provided before any investment is made. Therefore, you need this to be simple and straightforward for your clients to understand. It may be that a client friendly document would be beneficial in your marketing collateral. Be sure to make the document brief, simple and engaging. If it is supposed to be used to help clients then create it from their perspective.

Market your firm

In terms of your marketing communications you need to itemise every aspect which adds value to the client.  Look at your services and be constantly asking what’s the benefit to the client i.e. adviser availability or various communication channels. Never take it for granted that it is obvious as clients may not be aware of all your features available in your service and anything which helps them will be a great advantage.

It is natural for changes to be concerning for us due to the uncertainty they create. Therefore, if your approach considers the perspective of your clients and the language they understand with the type of service they’ll be hoping to receive it should resonate with them.

This blog covered the general changes of the MiFID II which will affect financial advisers and the next blog looks at building a culture of trust in a period of change.