First thing’s first: for those not familiar with Latin, ex-post means ‘after the fact’, as opposed to ex-ante, which means ‘before the fact’, or pre-sale.
Ex-post disclosure is about an ongoing, post-sale MiFID II requirement on advisers and other distributors.
What is ex-post disclosure?
If you provide ongoing services then, by April 2019, you will need to give investors a ‘personalised and aggregated’ view of all their costs and charges since 3 January 2018, when MiFID II came into effect.
This is so they can see for themselves the effect charges are having on their returns, so you’ll also need to illustrate their impact.
From then on, you’ll need to do this at least once a year.
The point of ex-post disclosure is to help clients continually evaluate the quality of their investments and how costs and charges affect them.
It will also impact platform providers, like us.
What do I need to do?
Helpfully, MiFID II doesn’t dictate how and when this information is shared with clients. So you can choose to disclose to all at the same time based on a rolling 12 month period (bulk basis), or do it individually – perhaps on investors’ review or anniversary dates, or ahead of a new tax year (individual client basis).
It’s also important to note that, though MiFID II does not specifically cover pension products, your clients are likely to want this included.
Your ex-post disclosure should be structured similarly to your ex-ante disclosures – so that’s one-off, ongoing, transactional and incidental costs all listed.
When do I need to do this?
You can begin your ex-post disclosures at any time between now and April 2019. Just don’t miss the deadline.
You will need to consider when the client joined the party, so to speak: before or after 3 January 2018 (when MiFID II launched).
For existing clients (pre-MiFID II), your first ex-post statement should cover everything between 3 January 2018 and your chosen reporting month (31 March, for example).
Then you’d follow that with a further disclosure on the next 12 months (if you decide to do it annually).
Obviously, if you’re doing this on an individual client basis, the time of each disclosure will differ.
For clients who joined you after 3 January 2018, your disclosure should cover everything between the date they joined and your chosen reporting month.
So your first ex-post disclosure to these clients will cover a part-year, and then annual statement will follow.
What are we doing?
For Zurich, it’s important to look at this on two fronts: as a distributor and as a provider of services to advisers.
As a distributor, we have a responsibility to provide ex-post disclosure directly to clients, and we’ll begin in April 2019, annually and in line with the bulk basis option. The ex-post statements will be included in clients’ April quarterly statements.
As a provider of services to advisers, we’ll do all we can to make advisers’ lives easier, though we know advisers may choose a different option to us. It’s about choice. So we are planning to provide a facility on the platform so advisers can request 12 month statements any time they wish.
One more thing
Across the industry, there is a lot still to do and information to be shared. And if a distributor is unable to identify the necessary ex-post information, they will have to refer back to the information disclosed pre-sale and use that.
So by the end of April 2019, the market will be aligned and the art of disclosure will be clearer for everyone. You heard it here first.
For more in MiFID II, including what happens when portfolio values drop 10%, take a look at our dedicated MiFID II information page.