Steve Owen, Head of Elevate Platform Proposition, looks at how Elevate can help you begin to meet the rules under PROD.
PROD, the product governance rules under MiFID II and IDD which came into force last year, was introduced to make sure that the investment and insurance products recommended to clients meet the needs of one or more identified target markets, are distributed appropriately and deliver appropriate client outcomes.
Looking at the heart of your client segmentation
Recommendations for investment products should be researched at an individual client level under PROD rules. However, as we all know, it would be really onerous for you to do this for each and every client. Instead, you can centralise the process by segmenting your clients into groups with similar characteristics, then documenting the investment proposition you offer each segment. You can segment your clients in a number of different ways, for example you may choose to do this by client objectives or by age.
The really important thing about client segmentation is being clear about which propositions you are looking to deliver to which client segment.
Recognising the differing needs of each client segment and how best to support these should be at the heart of your client segmentation. The key elements of your proposition such as service, financial planning and investment management can then be tailored as you choose.
How Elevate can help
PROD requires you to make sure that the investments you are choosing for your clients are suitable and Elevate offers considerable choice and flexibility to help you meet the needs of your client segments. The platform allows you to mix and match investment approaches and accommodate a number of different investment strategies for accumulation and decumulation.
PROD is all about the suitability of investment and tax wrapper solutions for each client. What Elevate does is make it easy for you to access and service the specific solutions.
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The value of investments can go down as well as up and could be worth less than originally invested.
Views expressed in this article should not be regarded as financial advice.
Laws and tax rules may change in the future. The information here is based on our understanding in October 2019.