No 1 Harley Street, London W1 www.sterlingandlaw.com February 2018 No 1 Harley Street, London W1 www.sterlingandlaw.com

Agenda The interim client report Client reviews under MIFID II DB cases – what is the regulator looking for? Guest Ian Hunter, Thesis

The interim client report How to position the interim report / discussion document Purpose? When completed? Time taken? When presented? Fee charged? Contents of the interim report

Positioning FCA is not a fan of contingency charging. To address this, a firm should charge for advice and should not depend on the purchase of a product for payment. To manage client expectations, the interim report and fee structure should be mentioned at outset; i.e. when the appointment is made. This will give the client(s) an understanding of our sales and fee charging processes.

Purpose? A recap of the client’s financial position, objectives and goals. An opportunity to focus on the potential solutions to their financial issues. A brief, easy to understand summary of your advice and reasons why. A presentation of options. An opportunity for your client to show commitment.

When completed, time taken, when presented? Completed between the factfind and presentation meeting(s). Should not take more than a couple of hours to produce. To be presented at the second / presentation meeting accompanying application forms and presentation documentation Minimum fee £500.00

Contents Summary of current position, objectives, requirements and goals Financial health check results where appropriate Attitude to risk and capacity for loss Summary of any existing plans Product(s) recommended and why Product charges and adviser fees

Contents Cashflow modelling for at retirement clients Recommendations Product and provider rationale Risk warnings

Let’s look at some examples

Client reviews What services are available to Premium clients? Annual reviews Meetings with their DFM Face to face reviews when required Ongoing support and advice via email and telephone Proactive advice on allowances, legislation changes and personal financial targets Goal setting, tracking and performance monitoring Quarterly newsletter

Client reviews What do your Premium clients want most? Annual reviews Meetings with their DFM Face to face reviews when required Ongoing support and advice via email and telephone Proactive advice on allowances, legislation changes and personal financial targets Goal setting, tracking and performance monitoring Quarterly newsletter

Client reviews Have you asked them what they want?

Client reviews Additional requirements under MIFID II Aggregated costs and charges illustration issued to client where available Notification of 10% drop in value since last quarter (DFM portfolios only) Use new client review template New review checklist Intelligent Office reports Suitability reports for reviews (to come)

Switches Additional requirements under MIFID II When arranging a switch advisers must first produce an illustration using the new fund and email to client asking them to confirm their understanding of any difference in charges BEFORE the adviser can instruct the switch.

Top ups Additional requirements under MIFID II Advisers must as a minimum create a file note which identifies any changes in client circumstances, ATR, fund choices and acceptance of fund charges File must also contain the client instruction, the illustration, IDD and KID(where available) as a minimum Advisers may choose to write a short suitability report if they feel such is required

New MIFID II jargon PRIIPS

New MIFID II jargon PRIIPS Packaged retail investment and insurance-based products

New MIFID II jargon PRIIPS Packaged retail investment and insurance-based products Packaged retail investment and insurance-based products (PRIIPs) make up a broad category of financial assets that are regularly provided to consumers in the European Union (EU) through banks or other financial institutions as an alternative to savings accounts.

New MIFID II jargon MIFID

New MIFID II jargon The Markets in Financial Instruments Directive

New MIFID II jargon The Markets in Financial Instruments Directive (MiFID) is the framework of European Union (EU) legislation for: investment intermediaries that provide services to clients around shares, bonds, units in collective investment schemes and derivatives (collectively known as 'financial instruments')

New MIFID II jargon KID

New MIFID II jargon KID Key Information Document

New MIFID II jargon Key Information Document KID Key Information Document KIDs will be uniform disclosure documents providing standardised information about PRIIPs in a way that is designed to give retail investors sufficiently clear, comparable information on the range of products available. The European Commission hopes this will increase competition, as well as boost transparency for investors.

New MIFID II jargon KIID

New MIFID II jargon KIID Key investor information document

New MIFID II jargon KIID Key investor information document The KIID is a two-page 'fact-sheet' style document which includes the critical information about a fund or ETF.

DB transfers Update from Chris Wells