Despite the preparation for, and implementation of, MiFID II dominating regulatory change over the last few years, 59 per cent of financial advisers argued the regulation is failing to deliver on its objectives.

The finding comes as AKG publishes its latest research, MiFID II implementation, a work in progress, which suggested there is more work to do be done in order to improve the industry’s reputation, as over half of advisers argued the regulation has not improved integrity, fairness and efficiency.

Furthermore, 43 per cent of advisers claimed that MiFID II had not improved their clients’ understanding of their investment services and how they are being charged, while 31 per cent said it had only slightly improved their understanding.

The report highlighted another worrying trend – an emerging advice gap as a result of the additional work that advisers must undertaking due to the new MiFID II requirements. Almost a third of financial advisers surveyed claimed they had either increased their minimum client portfolio requirements already or are considering the move.

This trend has been seen across the industry and likely contributed to Standard Life’s recent announcement that 750 clients of its restricted national advice business, 1825, could become non-advised, as revealed in a review of their client proposition.

Advisers’ workloads and time pressures are increasing alongside the cost of providing advice, and this has been supported by AKG’s finding that 51 per cent of advisers cited that the greatest discrepancy in reporting standards between DFMs and the platform operators they use was around disclosure of costs and charges.

This has made the process of servicing a client more expensive and is driving the access to advice ‘upmarket’ – an unintended, but regardless apparent consequence of the introduction of MiFID II.

However, while opinion seemed to be generally underwhelming and indicated there is still substantial work to be done, advisers acknowledged that there had been some positive outcomes, with 37 per cent stating that MiFID II improved the disclosure of costs and charges, while 31 per cent claimed transparency of services provided, performance and charges.

Also, 53 per cent rated the quality and clarity of pre-sale costs and charges reporting to be positive – a number that falls to 42% in relation to post-sale reporting. Just under half (45 per cent) of those surveyed felt that, to varying degrees, there had been some improvement to clients’ understanding of their investment services and how they are being charged for these services. This serves to provide another example of how further work needs to be done in terms of improving understanding of MiFID II initiatives.

Commenting on the findings, AKG communications director Matt Ward said: “Major points of concern to emerge from both the quantitative and qualitative MiFID II market research carried out by AKG are discrepancies, inconsistencies and challenges with costs and charges disclosure and challenges with composition and delivery of ex-post reports/projections.

“Talk of ‘best fit’ and ‘best endeavours’ is not good for the industry and improvements need to be seen quickly. Collaborative efforts around establishing best practice and standardisation, as well as further improvements in data/charge sharing are an industry must.”

Netwealth intermediary business developer Sophie Austen added: “I was not surprised by the general negativity of the responses to the online survey, it echoes the sentiments expressed during my own conversations with intermediaries.

“It is disappointing that the industry hasn’t managed to deliver on some of its responsibilities under MiFID II as this could lead to shortfalls in client outcomes.”

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