Financial services consultancy firm AKG carried out a survey of 100 financial advisers about preparing for the introduction and delivery of Mifid II.
Some 59% of advisers believe the regulation has failed to deliver on its objectives of improving integrity, fairness and efficiency within the wealth management industry.
Also, 43% felt that Mifid II has not improved client understanding at all and 11% felt that it has even reduced understanding.
More than half (51%) of advisers think the reporting of costs and charges must be more consistent across the DFMs and platforms they use.
Call to action needed
Matt Ward, communications director at AKG, said: “It is disappointing to see that many of those advisers surveyed do not feel that, at this stage, Mifid II is delivering improved integrity, fairness and efficiency in the wealth management industry.
“Rather than dwell on this, it should be viewed as a call to action for all industry participants. Strong, collaborative efforts need to be made during the second half of 2019 and during 2020 to ensure that these core Mifid II initiatives begin to bear fruit.
“Given the huge amount of time and resource that has been sunk into preparation and implementation, it would be a great shame if these initiatives could not be translated into beneficial change for customers and the sector.”
AKG’s research also found around one-in-three (34%) financial advisers expect clients to switch investment solution/provider in the future.
Some 62% said the standard of reporting and transparency on charges and services already influences their preferred choice of DFM and platform.
While 66% said additional Mifid II requirements mean they have more work to do, nearly a third said they have increased or are considering increasing their minimum client portfolio size.
Trickle-down incomplete data
Sophie Austen, head of intermediary business development at UK wealth manager Netwealth, said: “The research identifies that the greatest propositional impact has been on intermediaries, largely due to the increased workload generated by additional Mifid II requirements.
“There’s little doubt that the workload has been amplified by the trickle-down effect of incomplete or inaccurate data being provided by other areas of the value chain.
“Worryingly, an increasing workload seems to be resulting in an emerging advice gap as servicing clients becomes more expensive – an unintended, but nonetheless apparent, consequence of the introduction of Mifid II.
“More needs to be done across the industry to address the quality of data being produced, as well as improving delivery, in order to alleviate some of the pressure on advisers and generate better client outcomes.”