Regulatory Alerts2022-10-31
Outcomes of the Suitability Test Investigation in Wealth Management and Investment Advice
The Dutch Authority for the Financial Markets (AFM) published the results of a 2020-2021 market-wide investigation into 13 investment firms and banks regarding their compliance with MiFID II suitability requirements. The report identifies critical gaps in client profiling, specifically regarding risk tolerance and goal feasibility, and highlights unrealistic return expectations and inconsistent risk assessments in model portfolios. Furthermore, the AFM notes that most firms fail to conduct cost-benefit analyses for portfolio switches and provide generic suitability declarations that lack meaningful value for clients.
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