The added value of an audit trail

With coronavirus-induced volatility hitting markets hard in February and March, many advisers found their processes under increasing strain. The FCA responded by suspending the MiFiD II 10% drop rule until October 1st and with markets showing more stability over the short term, it’s an ideal opportunity for advisers to ensure their processes are compliant and scalable.

07 September 2020

The introduction of MiFiD II put even more emphasis on the suitability of a client’s investment proposition. This included keeping detailed and accurate records of the research that led to a Financial Adviser’s investment decisions. Advisers have been vocal about the strain that the volume of regulations and reporting has on their businesses and the burden of regulation is seen by many as the biggest cause of concern in the running of an adviser practice*.

Unsurprisingly, the process of evidencing research and advice recommendations isn’t something that the majority advisers look forward to, but should you face any regulatory investigation, being able to fall back on a thorough audit trail is key. In order to keep a well organised audit trail, all information must be kept on file but this can be an arduous task, especially during times of volatility.

However, it’s not just vital to keep a comprehensive audit trail for the sake of the regulators, it also protects your company from liability in legal battles and can improve the service you provide to your clients."

The requirement to document your process has the added benefit of helping you keep your clients informed about the benefits of working with you as an adviser. MiFID II also put an increased emphasis on fee transparency. Providing your clients with a transparent insight into your investment research, process and decision making can keep them engaged, build confidence and demonstrates why they are paying for your services.

Increased competition and the squeeze on adviser fees mean that to help you attract new business and keep your existing clients, demonstrating the value of your advice is now more than important than ever.

With data, charts and a wealth of background detail, FE Analytics is the ideal investment research tool to help you manage your investment proposition. FE Analytics saves all your research and historical portfolio changes for every individual client, allowing you to show what you have recommended and why. This can help ease the effort needed to create and maintain your audit trail, saving you valuable time that can be better spent with your clients.

Our data collection process compiles and verifies MiFID data on over 95% of EMT share classes, investment trusts and ETFs – all readily available on FE Analytics, saving you time by offering a single source of accurate and reliable data.

The Ex Ante Costs & Charges Calculator is another helpful tool within FE Analytics, that can help advisers set up a smooth and reliable reporting process and demonstrate value. It allows advisers to calculate the pre-sale costs disclosure required under MiFID II and has a summary reporting functionality that can be used for client reports.

FE Analytics can make your compliance process easier by saving an audit trail of all your research and historical portfolio changes. If you'd like to learn more about how it can improve your processes, please get in touch with one of our specialists and ask for a live demo.

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*2020 FE Fundinfo Adviser Survey