MIF 2 will impact distributors' information systems by requiring enhanced client, product, and advisor profiling capabilities. Systems must dynamically manage and ensure adequacy between client risk profiles, financial product distribution strategies, and advisors' capacities. Systems will need to store detailed product information and allow for portfolio monitoring against client profiles with warnings and an audit trail. CRM tools will need to provide dynamic client data analysis and comprehensive relationship recording and traceability.
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Impacts on the Information System for distributors of financial products
MIF 2
1st December 2015
Version 1.00
2. 2
TABLE OF CONTENTS
1
0 Introduction
2
Axes of evolution with MIF 2
Impacts on the information systems
3. 3
INTRODUCTION
MIF 2 entry into force is scheduled for January 2018 and aims to enhance
the investors’ protection through an enhanced transparency.
MIF 2 will revolutionize the organization of financial products distribution
including the restriction of management companies’ commissions
retrocessions payment to funds distributors when the latter are declared
as independent. This also applies to outstandings managed under
mandate.
0
4. 4
AXES OF EVOLUTION WITH MIFID 2 FOR
DISTRIBUTORS
1
IMPACTS OF
MIFID 2
1 Client / CRM profiling
• Establish clients risk profile
• Measure tolerance to losses
compared to client actual situation
• Change of situation
2 Product profiling
• Set a segmentation according to the
target market and the client
category
• Define the distribution strategy and
follow adequacy
3 Distribution circuit
• Classify products by risk profile
• Manage distribution mode by
advice capacity typology
4 Information transparency
• Costs display
(advice and
process)
• Provided
services costs
display
8 Permanent report
• Control risk profile/product adequacy
• Report on advice during client
relationship
• Track recommendations
5 Record keeping
• Prove that an advice service existed
as well as a client relationship
follow-up
6 Producer/distributor agreement
• See impacts on the distribution
method (inducement, traceability)
• Reset the contractual enhancements
of the distribution circuit
7 Client agreement
• Set client agreements adapted to
the MIF2 expectations
• Adapt the RTO/under mandate
distribution method
5. 5
IMPACTS ON THE DISTRIBUTORS
INFORMATION SYSTEM
2
Profiling / Segmentation
Risk
profile
Advice
profile
Product
profile
client
collaboratorproduct
compliance
With MIFID 2, we must be able to manage profiles adequacy on 3 axes:
The client
The client risk profile must be determined according to the financial
products typology.
Moreover, in the client profile determination, his loss tolerance must be
evaluated according to his actual situation.
The latter concept brings a dynamic aspect of data analysis to this profile
management.
The financial product
Elements transmitted by the producer must be managed in terms of target
market, clients target typology as well as this product’s distribution
strategy. These elements are used to evaluate the level of advice to realize
during sale and during a product cycle.
The collaborator
This management belongs to the concept of distribution strategy and
advice level expected for the product sale.
6. 6
IMPACTS & INTER-ACTIONS ON DISTRIBUTORS IS
Risk
profile
Advice
profile
Product
profile
client
collaboratorproduct
compliance
CRM
Clients behavioral analysis
Products catalogue
Distribution strategy
CRM
Clients communications
records & traceability
Warnings, arbitration
and audit
Permanent control
2
7. 7
CONCLUSION 2
Enhancements brought by MIF 2 will particularly impact the information system within the financial products
distribution framework.
The systems must be provided with profiles management that enables to dynamically control the characteristics
adequacy between the client risk profile, the distribution strategy determined at the financial product creation and
the capacity of the distribution network collaborators advice.
The systems must manage a products catalogue with important information concerning characteristics on the
method of distribution, advice and adequacy compared to network collaborators and clients risk profiles.
The systems must set a permanent control on the clients investment portfolio evolution compared to their profile
with warnings management, allowing arbitrations when necessary and an audit trail for these financial products
distribution agreements.
Finally, the CRM tools are also impacted with the clients data dynamic analysis, to establish loss tolerance
regarding clients financial situation, with client relationship recording and traceability.