In this, the final article in our MiFID II series (at least for now!), we re-visit the requirements for firms to disclose aggregated costs to clients on an annual basis.
We covered what is required at a high level in one of our Disclosure articles. You can read that article here.
We have been receiving a lot of calls and queries on this as, for the most part, firms are totally unclear about how they can deliver this requirement.
We have also been wrestling with this whole issue, not because it is unclear what is required (although the rules on this are extremely hard work to understand) but because it is unclear how the market as a whole will deal with this.
Aggregated costs cover all costs, from the fund manager to the provider, to the platform, DFM, Adviser Firm and anywhere else in the chain of advice where the client incurs a cost. So, there are many pieces of a jigsaw to put together and it is entirely unclear at time of writing (December 2017) how the various players will meet their part of the disclosure puzzle.
We have concluded that the prudent course of action is to wait and see. The first disclosure does NOT have to be made on 3 January 2018, in fact it could be well into 2019 before firms have to issue the first disclosure of aggregated costs to clients. So, we think that waiting for providers and others to clarify what they will do and how they will do it is a reasonable way to proceed.
We would expect to be able to clarify this whole issue early in 2018 but, meantime, we believe that it is not necessary for firms to panic about this requirement …yet!