Investment management company PortfolioMetrix believes advisers are finding the Product Intervention and Product Governance Sourcebook (Prod) complex and difficult to comply with.
That is something that International Adviser found as well, since many advisers, who attended IA’s Future Advisory Forum Europe event in London, said they are looking at different ways to meet the regulation’s criteria.
Prod came in as part of Mifid II and sets out suitability criteria financial advisers need to follow when choosing and proposing a product to their clients.
As a result, the investment firm has unveiled a toolkit to develop a Prod-compliant approach which is supposed to satisfy the regulator, PortfolioMatrix explained.
Ben Peele, managing director of PortfolioMetrix UK, said: “Before producing our toolkit, we consulted with groups of advisers to find out their issues with Prod compliance.
“What we discovered is that advisers find the process daunting and perceive it to be complex, while the experts are warning that the regulator is likely to clamp down hard on any adviser they find are not complying with the regulation.”
Keeping it simple
The newly-introduced tool, called “A ‘Prod’ in the Right Direction”, covers the whole process required by the regulation, including:
- Target market assessment: deciding how to segment clients
- Prod methodology: a ‘how to’ guide to get your business Prod ready
- Your Prod approach: how you can structure the process to meet your needs
- Prod policy: what you should document for your specific business
“Advisers who have completed the process told us it’s very easy to get lost in the finer details, which makes implementing an effective solution tricky,” Peele added.
“Keeping it as simple as possible is key and it’s essential to find common ground among your clients or you will end up with as many segments as you have clients, which quickly makes the process unwieldy.
“The key to simplicity is having a structured, repeatable process.”
