With Brexit on the horizon and the new General Data Protection Regulations coming into force, 2018 could be a busy year for independent financial advisers.
A year of change – that’s what is on the horizon for advisers with new regulations and fresh challenges. MiFID 11 came into effect on the 3rd Jan 2018, and processes need to be tweaked in order to be compliant. Its purpose is to offer greater transparency and protection to investors across all asset classes.
Risk assessments will need to be thoroughly checked to ensure that the products meet the needs of the customer.
All ongoing charges will need to be completely transparent as well as the impact these charges could make to the customer’s portfolio. Improving data accuracy will become ever more important, as any discrepancies could lead to regulatory punishment.
Another important feature of the new regulations is with regard to client conversations, which will need to be recorded digitally or written on paper. In this age of litigation, a digital recording would provide indisputable evidence of any conversations which took place.
Finally, all advisers who make investments on their clients’ behalf will need LEI (Legal Entity Identifiers). Again, this is to provide complete transparency about what is happening in the financial markets, and advisers without LEI will not be able to process any transactions for their clients.
Advisers have had sufficient time to prepare for all these changes and will have prepared individual responsibility statements advising who carries responsibility for which function, all approved by the FCA. They will need to create and annually carry out an individual certificate regime and make sure that their compliance and monitoring policies have been reviewed and revised and any training about the new rules arranged. Financial adviser software from https://www.intelliflo.com/ is designed to assist the advisers so protocols have been put in place to make sure the system is up to date with any changes to legislation.
There will be an impact on UK investors and fund managers’ decisions due to uncertain economic and market environments, coupled with the problems created by Brexit. Investors will need to think long-term and remain disciplined and focused on their investment philosophy for 2018. With plenty of opportunities for bottom-up stock pickers, selectivity will be the key for 2018.