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The EU leapfrogs the US on investor protection

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The new EU rule, MiFID II, requires that advisors report all-in costs to clients. SEC Reg BI does not. What will US firms in Europe do?

By Knut A. Rostad and Darren M. Fogarty

The Markets in Financial Instruments Directive II (MiFID II) was put in place in Europe in January 2018. The rule aims to increase clarity in European Financial markets by requiring “providers of investment services” (advisors), to clearly detail how much their products and advice cost. It requires disclosure of projected costs looking forward, and actual costs and charges, for the prior year in absolute and percent terms. The disclosure requirement for actual costs is new, with many firms only coming into compliance in Q1 of 2019.

MiFID II’s standard raises the transparency bar well above the U.S. SEC’s proposed Regulation BI and Form CRS. They only require a list of the tasks and services which will or may incur a cost or charge.

Read the full paper below in PDF format or download the paper.

Dan Moisand

 

Dan Moisand is a nationally recognized fiduciary fee-only financial planner, an Institute Real Fiduciary™ Advisor and Chair-elect of the CFP Board.

The Institute has enshrined the ‘Moisand Rule’ on fiduciary practices. It is basic and is more important today than ever: “You have to avoid conflicts. If I avoid a conflict, I don’t worry about it.”

Watch the video of Moisand speaking here.

Bob Veres

 

Bob Veres is a long term observer of financial planning. His Newsletter, “Inside information” Is a staple of leading planners. In the May edition he writes about fiduciary and the Institute.

"But a much bigger point is that the fiduciary standard—as Knut Rostad of the Institute for the Fiduciary Standard has pointed out—has been determined by the Supreme Court (1963 ruling) to be at the very heart of the Investment Advisers Act of 1940. It is the foundation of what it means to be an RIA registered with the SEC instead of a tipster or a tout."

- Bob Veres, Parting Thoughts ... The SEC's Own Compliance Culture