Regulation

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Across the globe, the financial services industry is being subjected to increasing regulation. While the pace and form of regulatory change may vary by geography and country, recurring themes include improved transparency and increased competition.

For wealth management in particular, this represents a major change, which, in many countries, could drive a major shift in the way investment firms conduct their businesses.

Retail Distribution Review (RDR)

In the UK, for example, the Financial Conduct Authority (FCA), implemented its Retail Distribution Review (RDR) on December 31, 2012. The RDR outlines supervisory policy guidelines, which the FCA expects the retail investment industry must adopt. The RDR was designed to provide a transparent, sustainable and competitive market, in which customers receive good quality advice, products and services tailored to their needs.

What does this mean for retail investment firms? The RDR will impose the following specific obligations on retail investment firms:

  • Advisers will need to disclose whether they are offering an independent or a restricted advice service
  • Independent advisors will need to be able to advise on all retail investment products: structured products, unregulated collective investment schemes (UCIS), exchange-traded funds (ETFs) and investment trusts
  • Restricted advisors are required to limit either the investment provider or range of products on which they can advise
  • Advisors are no longer able to receive a recurring or trailing commission against investments, but must disclose up front how much advice will cost and how it will be charged
    • Payment options: deduction from investment, cheque, etc.
    • Pricing options: fixed fees, hourly rate, % of invested funds or menu of pricing options, etc.
  • Advisors will have to demonstrate improved knowledge and professionalism through programs of continuous improvement

Although RDR is UK-focused, financial advisers around the world will most likely have to comply with similar legislation in the future, if indeed they do not already.

How effectively are you handling  RDR?
  • Do your systems allow you to fulfill the pricing and invoicing obligations of RDR with minimal manual dependencies?
  • Can you quickly add, maintain or retire new investment products for which you are eligible to provide advice?
  • Can you flexibly maintain standard pricing schedules and rules for different investment products?
  • Are you able to control and monitor negotiated pricing offers automatically in conjunction with approval workflows?
  • Can you automatically generate invoices to clients, clearly detailing individual investment products and currencies, investment amounts and values and service fees?

If you answered ‘no’ to any of the above, your organization could benefit from reviewing its current and future technology needs.

miRevenue for Wealth Management: Regulation

Designed and built specifically for the financial services industry with modern, enterprise-grade architecture, Zafin’s miRevenue comprises a suite of tools which will allow investment firms to not only comply with RDR, but also provide capabilities to create a strategic competitive advantage by offering more differentiated and flexible service and price propositions to existing and prospective clients.