The indications and regulatory provisions in the financial field are constantly evolving, for instance as further specifications within the path traced by the MIFID II, now under consolidation.
As a consequence, we are always at work to implement new features in our solutions. One of the latest is the assessment of the costs and benefits of a portfolio, an activity made urgent by the need to point out in a timely manner that the benefits of an investment change are greater than the related costs.
Portfolio and Quantitative Analysis
This allows the introduction of a logic of quantitative analysis of costs within the adequacy process, to be considered in the limited scope of the portfolio rebalancing (purchases + sales) and with a view to a clear disclosure in terms of commission profile, although estimated ex ante.
By definition, this control is configured as a multistep control, in which the cost evaluation is the primary element of the comparison between the initial and final portfolios, possibly mitigated by the presence of configurable tolerance thresholds used by an internal engine that return the costs by category (recurring, one-off, incidental…).
Sometimes Less (Cost) Is More (Risk)
The next step, triggered if the final portfolio costs are higher than the initial ones, analyses the reasons and explains why, despite the proposed investment being higher it is still preferable (on the basis of specific parameters: risk and decorrelation of portfolio risk, concentration and recommendation of products etc.) and presents this to the client in a clear and concise manner.
Assessing cost and benefits of a portfolio is useful to stay compliant with MiFID II, sure, but is also one more way to provide the best service to the investor. This improves the client satisfaction and makes the advisor happier.