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Mifid II red tape more challenging than Brexit for advisers

More advisers consider Mifid II to be a greater challenge to their businesses this year than Brexit, underscoring the concern about the regulations, new research says.

Mifid II rules were introduced in January and include changes to research costs and fee disclosure.

A CoreData Research online study of nearly 1,000 advisers shows 28 per cent of respondents see volatile markets as the biggest challenge for advice businesses this year.

Nineteen per cent of respondents believe Mifid II is the second biggest challenge while 15 per cent say Brexit is their next highest concern.

Thirteen per cent rated macroeconomic risks and GDPR as equally challenging while only 9 per cent say cybersecurity is an issue.

The study also reveals 57 per cent of advisers think Mifid II has been an unnecessary burden with a similar proportion or 56 per cent seeing the regulation as a waste of time and money.

Advisers are struggling to see the wider rationale of the regulation as 34 per cent do not think Mifid II is a sensible package of reforms that will improve industry standards.

Going forward, 41 per cent think Mifid II will result in higher advice fees — significantly higher than the 24 per cent who disagree.

Sixty-five per cent of respondents say the most challenging aspect of Mifid II for advisers is the disclosure of aggregated costs and charges.

This is followed by writing suitability reports (32 per cent), recording client conversations (27 per cent) and reporting when a portfolio has dropped 10 per cent or more (23 per cent).

Advisers think increased market transparency (26 per cent), improved investor confidence and trust (23 per cent) and enhanced investor protections (17 per cent) are the main benefits of Mifid II.

CoreData Research head of international Craig Phillips says: “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.

“Encouragingly, these top three benefits all align to the needs of investors — indicating that advisers are putting clients first and foremost.”

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