Perception A: European wealth managers are failing to adapt to MiFID II

Perception A: European wealth managers are failing to adapt to MiFID II

8 januari 2024

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Research for a new report from behavioural finance experts Oxford Risk reveals many European wealth managers are failing to adapt to MiFID II by not fully assessing client suitability and risk levels.

The report, entitled ‘wealth managers are still adapting to MiFID II’ outlines the full research study with European wealth managers who collectively manage assets of around € 3.2 trillion and gives new insight into the current state of the European wealth management sector. It’s now available to download via the Oxford Risk website.

Key findings include:

  • The study found that just two out of five (38%) European wealth managers are fully aware of and strongly understand the European Securities and Markets Authority (ESMA) MiFID directives on sustainability (ESG) assessments.
  • Despite ESMA updating its guidelines to integrate sustainability factors, risk, and preferences into investment firms’ organisational requirements last September there are still more than one in 12 (13%) wealth managers who admit they don’t know what the directives on sustainability assessments are or are unsure they understand them.
  • The study found that despite being integrated into MiFID II requirements, less than one in five (17%) wealth managers ‘strongly agree’ that their firm has successfully incorporated a method of establishing a client’s sustainability preferences into their processes.
  • European wealth managers are relying too much on their own intuition and clients’ own self-assessment of their suitable risk level, the research found. Around three out of four (75%) admit they largely rely on clients to tell them what their suitable risk level is. Around one in five (22%) say they strongly agree that they rely largely on client self-assessment when it comes to setting risk levels.
  • Advisers are often also basing decisions on their own intuition. Around seven in ten (71%) wealth managers say they rely on intuition to assess an investor’s suitable risk level. Around a third (34%) strongly agree that they do this.

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