According to CoreData Research, advisers believe MiFID II is a bigger challenging than Brexit.
A study by the research firm of nearly 1000 UK financial advisors indicated that 19% deemed MiFID II a challenge followed by Brexit at 15%. Macroeconomic and geopolitical risks stood at 13%, GDPR 13% and cybersecurity 9%. The top challenge was said to be market volatility at 28% but perception of the challenges of MiFID II is interesting.
The study continues to state that a majority of advisers think MiFID II has been an unnecessary burden (57%), with a similar proportion seeing the regulation as a waste of time and money (56%).
“The fact that advisers consider MiFID II more of a challenge than Brexit and macroeconomic risks speaks volumes about the scale of concern over the regulation,” states Craig Phillips, head of International, CoreData Research.
Nearly a third of advisers (30%) say MiFID II has had a negative initial impact on the advice industry compared to 21% who think the regulation has been positive. And one quarter (25%) say the initial impact on investors has been negative compared to 17% who say it has been positive.
Going forward, four in 10 advisers (41%) think MiFID II will result in higher advice fees — significantly higher than the 24% who disagree. And more than a third (36%) agree the regulation will result in a fall in adviser numbers compared to 23% who disagree.
In brief, advisors find MiFID II a huge hassle.
Markets in Financial Instruments Directive II or MiFID II is a collective regulatory approach to streamlining the purchase and sales of securities across Europe. MiFID II is an update from the previous version to “introduce substantial and wide ranging measures designed to improve investor protection and promote market integrity, and to meet G20 commitments on reforming and strengthening derivatives markets.
Key Findings of the CoreData Research:
Which of the following do you think poses the biggest challenge for your business this year?
- Volatile markets: 27.5%
- MiFID II: 19.3%
- Brexit: 15.3%
- Macroeconomic and geopolitical risks: 13.2% GDPR: 12.7%
- Cybersecurity: 8.9%
- Robo-advice: 3.1%
To what extent do you agree or disagree with the following statements?
MiFID II has been a waste of time and money
- Strongly disagree: 1.6%
- Disagree: 15.4%
- Neutral: 27.3%
- Agree: 38.3%
- Strongly agree: 17.4%
MiFID II has been an unnecessary burden
- Strongly disagree: 2.1%
- Disagree: 16.1%
- Neutral: 24.7%
- Agree: 39.1%
- Strongly agree: 18.0%
MiFID II is a sensible package of reforms that will improve industry standards Strongly disagree: 10.6%
- Disagree: 23.7%
- Neutral: 42.1%
- Agree: 21.0%
- Strongly agree: 2.6%
MiFID II will result in higher advice fees
- Strongly disagree: 1%
- Disagree: 23.4%
- Neutral: 34.6%
- Agree: 32.7%
- Strongly agree: 8.3%
What are the most challenging aspects of MiFID II for you and your firm? Select all that apply
- Disclosure of aggregated costs and charges: 64.7%
- Writing suitability reports: 31.5%
- Recording client conversations: 26.7%
- Reporting 10% drop in portfolio valuations: 22.8%
- Detailed transaction reporting: 20.8%
- Legal Entity Identifiers: 12.4%
- Target market identification: 8.8%
- Stricter inducement rules: 2.8%
- Complaint handling: 2.3%
- Other: 1.8%
How difficult was the MiFID II implementation process for your firm?
- It was straightforward and easy: 14.8%
- It required minor tweaking of our processes: 54.1%
- It required a lot of work: 29.1%
- It required fundamental changes to our processes: 2.0%
Have you found MiFID II implementation harder than expected?
- Yes: 28.6%
- No: 17.9%
- As expected: 53.5%