A study from CoreData Research, which surveyed almost 1,000 UK advisers, found 57 per cent thought Mifid II was an unnecessary burden and 56 per cent said they saw the regulation as a waste of time and money.
Of those surveyed, 28 per cent found volatile markets to be their biggest concern this year while 19 per cent deemed Mifid II to be the challenge.
The study revealed advisers were struggling to see the wider rationale and reasoning behind the regulation, as 34 per cent said they did not think Mifid was a sensible package of reforms that would improve industry standards.
Brexit was third in the list of challenges for advisers (15 per cent) followed by macroeconomic and geopolitical risks (13 per cent), other EU regulation the General Data Protection Regulation (13 per cent), and cybersecurity (9 per cent).
"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," said Craig Phillips, head of International at CoreData Research.
He added: "Encouragingly, these top three benefits all align to the needs of investors. This indicates that advisers are putting clients first and foremost."
The research found a third of advisers thought the directive has had a negative impact on their industry while 25 per cent thought the initial impact on investors had been negative.
Going forward, 41 per cent thought Mifid would result in higher advice fees and 36 per cent agreed the regulation would result in a fall in adviser numbers.
The most challenging aspect of the regulation for 65 per cent of advisers was the disclosure of aggregated costs and charges.
From next year advisers will have to send out documents detailing exactly how much they're charging, with break downs for where the money is going.
Speaking at the Chartered Institute for Securities & Investments (CISI) financial planning conference yesterday (1 October), he said: "In the future we should reach a [fees] level around 1 per cent but we are not there yet."
Advisers have so far struggled with implementing the new rules, which came into effect on 3 January, with 29 per cent saying it had required a lot of work.
Rules mainly affect advisers who have discretionary permissions and they include having to establish legal entity identifiers for investors investing in tradable shares and notifying them of large portfolio drops, alongside other transparency documentation.
When asked what they would have done differently in terms of implementation, 70 per cent said they would have started to prepare earlier.
Tamsin Caine, head of financial planning at Smart Financial, said: "There are parts of the regulation that are quite useful and allow us to focus our minds on things that clients should know and it's useful to recap fees they are paying each year.
"It’s onerous for advisers to be expected to write a letter telling our clients that everything is where it should be because, if we thought clients should be doing something different then we would tell them.
"There is a big part of Mifid that is an admin burden and the fact that the rules weren't all in place when it was introduced caused confusion and some advisers weren't prepared and some still aren't."
The regulator allowed for a grace period following the January rule change but warned in June it would start holding firms to account if they are found to have failed to comply.
rosie.quigley@ft.com
