Operational Implementation of the New Sustainability Rules for Private Bankers and Financial Advisers

Bankers are facing fresh challenges due to the emergence of sustainability regulations applicable to investment firms. These regulations extend to product governance, investment advice, and portfolio management. In contrast to the traditional suitability assessment that concentrates on a client's risk profile, knowledge, experience, financial situation, and objectives, the new ESG (Environmental, Social, and Governance) requirements go further. Bankers' recommendations now include considerations for clients' sustainability preferences. Therefore, acquiring additional skills and relevant expertise is crucial for compliance with the evolving regulatory landscape and to meet clients' expectations regarding ESG criteria.

• Gain knowledge and comprehension of the regulator's expectations concerning ESG risks under MiFID 2 in the context of Sustainable Finance

• Acquire the necessary insights to seamlessly incorporate these regulations into your risk management system

• Develop the ability to recognize and assess the impact of these regulations on your business

PART 1: EVOLUTION OF THE SUITABILITY TEST ON CUSTOMER PREFERENCES

Understanding the scope of MiFID 2 in relation to sustainable finance and disclosure requirements :

• Understanding the context of MiFID II in the sustainable products strategy

• Taking into account customer preferences in terms of sustainability

• Delegated Regulation 2021/1253

• Changes to the suitability test: new questions to be included

• Setting up a questioning strategy

• New obligation to offer sustainable products to customers in line with their preferences

• Examples of customer questionnaires

• Obligation to keep records of clients' ESG preference choices

• Timetable for entry into force and implementation

PART 2: NEW PRODUCT SEGMENTATION A, B, C UNDER MIFID 2

Be familiar with the new classifications for sustainable products under MiFID 2 :

• Definition of A products and link with Taxonomy

• Difference between the SFDR and taxonomy definitions of sustainability

• Definition of B products and link with SFDR

• The concept of PAI (main negative impacts)

• Definition of C products and link with SFDR

• Definition of customer profile

• Matching products to customer interests

• Consulting: gathering and assessing ESG preferences

• Main practical challenges in assessing customer preferences

PART 3: SEVERAL PRODUCT COMBINATIONS A, B, C, PRODUCT MIX AND SETTING THE SCENE

Have the keys to identifying, analysing and allocating assets in a fund according to the A, B or C typology :

• Know examples of possible customer situations to manage

• Possible product combinations

• Products AB, AB, BC, BC, AC, ABC

• Product mix

• Fund asset allocation strategy

• Example of a situation in response to customer needs.  What to do if a customer asks :

1. 1. A product with impact

   2. A net-zero product in line with the Paris agreement

   3. A product whose preferences are not covered by MiFID2 categories

PART 4: SUMMARY AND CONCLUSION

Professionals of the Financial Sector (especially risk managers for the Risk module and private bankers, wealth managers, financial advisers and relationship managers for the MiFID II ESG module).