MIFID ll – compliance, business strategy or both?

David Tiller

David Tiller, Head of Adviser and Wealth Manager Propositions at Standard Life, discusses the ways in which platform providers can help advice businesses respond to regulation change.

When you read headlines about MIFID II, is your first response anxiety about compliance with a fast approaching deadline, or excitement, as you plan how to use it as a springboard to move your business forward?

Major regulation has a habit of reshaping markets; we may understand that we should view it as a strategic opportunity, but daily business pressures may mean we feel we don’t have that luxury.

An influencing factor in how advice businesses respond to regulation like MIFID II is how well their business is supported by their platform provider. As custodian of your client’s assets, a platform is core to your business. It should help you deliver your client proposition and run an efficient, well controlled business.

As a regulated adviser, you assume certain responsibilities for your clients. MIFID II adds to these responsibilities in a number of investment-related areas. Given the data it holds, your platform is best placed to support you with these requirements, but it’s not always compelled to do so.

A platform provider with a track record of simply complying with minimum requirements may help you attain minimum compliance, but neglect the client experience this creates. This can add unnecessary complexity and cost into your business. A recent example of this would be the complexity created by providers protecting legacy platform pricing structures and share classes rather than moving in bulk to a clean model.

Platforms have an obligation to advisers and their clients. Taking short cuts can be costly in the long term, but a platform partner that consistently takes a progressive view of regulation can help you improve client service and deliver strategic advantage to your business.

Why platforms must step up and support the MIFID change

1. We have a collective responsibility to improve the client experience

The investment industry has contributed to the need for regulation in the first place.

Historically, it may have focused on product design rather than client needs. This has manifested as complex, opaque products and often as an absence of quality, ongoing service.

Regulation that includes MIFID II, has intervened to address this. It aims to protect clients and increase confidence, by improving transparency, oversight and communication.

An exclusive focus on minimum compliance standards alone means we are not addressing these fundamental client needs, which also increases the risk that regulators will demand further change in the future.

2. Platforms are a digital enabler

This isn’t marketing rhetoric. It’s precisely a platform’s role in an advice business. Advisers must hold their platforms accountable during times of regulatory challenge and should expect full support to meet compliance and client needs.

What next?

MIFID II comes into effect on 3 January 2018. Once you’ve got your head around the changes, it’s vital to understand the impact on your business and how your partners and suppliers will help you. You may need to upgrade your processes, reporting and client communications. The best platforms will be able to describe how they can help you do this.

It’s also important to look beyond the immediate regulatory requirements. How can you improve your business and value proposition over the longer term? This may mean simplifying your business model. MIFID requirements may mean that dealing with multiple investment and platform providers will become more complex.

It may also create opportunities to differentiate your CIP. Direct to customer propositions will have to be absolutely ‘plain vanilla’ from an investment point of view. In a robo-enabled future, giving advised clients access to increased investment sophistication could really demonstrate added-value that can’t be accessed without you.

By keeping a collective focus on improvements for the long term, we’ll help protect clients, create greater confidence in advice and build sustainable businesses that are in it for the long haul.


The views expressed in this article are those of the author and not Standard Life.

Standard Life accepts no responsibility for advice that may be formulated on the basis of this information.