As you may be aware, significant changes to European financial regulation are coming into effect from January 2018 as a result of the implementation of the European Union (Markets in Financial Instruments Directive) Regulation 2017, commonly known as “MiFID II”.
What is MiFID II?
MiFID II, the second Markets in Financial Instruments Directive, comes into effect on 3rd January 2018. It aims to align regulation across the European Union (EU) in certain areas and increase investor protection.
Davy welcomes this regulation and our dedicated MiFID II project team has worked to implement the necessary changes. We continue to invest heavily in our people, processes and systems to ensure our clients’ interests come first and we continue to make a difference that matters.
How does MiFID II affect me as a Davy client?
In practical terms, there will be some changes to how we interact on a day-to-day basis. These changes are reflected in your new Terms and Conditions.
We have outlined below some of the MIFID II changes:
For clients with advisory and/or discretionary portfolios, when changing the mandate, or for new clients, in addition to completing the current Investor Profile assessment, you will also complete an Attitude to Risk questionnaire. Its purpose is to formally determine how you make decisions when there are risks involved. The information gathered in your Investor Profile and your Attitude to Risk questionnaire is then translated into a Client Suitability Report. Each year we will assess the information outlined in your Client Suitability Report to ensure it continues to be in line with your long-term objectives and goals.
For clients with advisory portfolios, MiFID II will bring more formality and reporting requirements to our engagements with you. In practice, every investment recommendation, whether implemented or not, will come with an Investment Recommendation Report giving the rationale of that advice and how it fits with your agreed strategy.
For execution-only clients, the regulation increases the requirement for investment firms to consider their clients’ knowledge and experience before making investments. This means we will alert you that investing in a complex financial instrument may not be appropriate for you.
Fees & charges
We currently provide details of our costs and charges in both our valuation statement and contract notes. Under the new regulation we will provide more information on non-Davy costs and in particular, third-party investment managers’ fees in your portfolio.This will be issued each year in your year-end statement and will bring further transparency to our costs.
Currently, most clients with advisory and discretionary portfolios receive valuation statements twice a year or on request at any time. Under MiFID II this will change to quarterly.
Clients of all service levels will now receive their report detailing investments held with Davy quarterly instead of an annually.
As noted above, clients with advisory portfolios will also receive an Investment Recommendation Report when we provide investment advice on any type of financial instrument.
This increased level of reporting will result in you receiving more correspondence than ever from us. While these are important documents, we understand that many clients would like to reduce the amount of paper correspondence they receive. We have recently relaunched our online portal, myDavy which allows you to access your account correspondence easily at any time and reduces ongoing paper correspondence. For more information on myDavy and how to register for paperless account correspondence, click here.
How can we help?
If you would like more information or have any questions in relation to MiFID II, please contact:
- For clients with advisory and/or discretionary portfolios, please contact your private client adviser.
- For Davy Select execution-only clients please email email@example.com.
- For Credit Union clients, please contact your investment manager.