Costing the impact of Mifid II

This is something advisers might want to bear in mind over the course of 2019 as they continue to face up to complying with Mifid II.

This month marks the first anniversary of Mifid II’s introduction. While these anniversaries are often used by compliance specialists as excuses for ‘thought leadership’, this one is actually meaningful.

That is because advisers are now tasked with providing their clients with ex-post charge breakdowns, detailing how much their clients have paid in fees and charges over the preceding year.

If your charges are at the higher end of the spectrum, then perhaps you will face some awkward conversations with your clients.

Whether this leads to clients ditching their advisers is debatable: research by the Financial Conduct Authority has shown advised clients are very sticky – once they become a client of a particular adviser, they tend to remain one.

But this does not mean advisers should be complacent.

For a start, past performance is no guide to future behaviour (to coin a phrase). If your charges are at the higher end of the spectrum, then perhaps you will face some awkward conversations with your clients.

But the second reason is that the FCA has clearly expressed interest in the amount of money clients pay to advisers, platforms and investment providers, and the way this all mounts up.

The part of London that I live in (for I am a member of the metropolitan elite) currently has two supermarkets – an upmarket one and a mid-range one – and a third will be opening soon: a well-known discounter.

Everyone is served, but these companies also have an interest in pricing as keenly as possible within their bracket – in pushing down the cost of buying falafel and avocado as much as possible on behalf of their customers.

It does not often feel that this is what happens in the world of investing. Perhaps it is time it did.

damian.fantato@ft.com