The attitude toward risk cannot be described with help of one or two basic indicators (combination of desired expected returns and volatility, for example). Communication of it between clientele officers and portfolio managers may often be difficult. NERP delivers therefore indications under two formats, providing the "missing link" which is crucial to make suitability effective. In this (extremely important) sense, it is both a communication and a coordination code within the financial institution.
NERP can very easily be integrated into your risk management policy: you are immediately able to unambiguosly describe each investor's risk profiling and decide upon your organization’s attitude in this respect. Your Risk Management Plan can easily assess suitability and appropriateness of products and investment services for your retail clients (NDLR : NERP helps to identify more than 12 distinct risk profiles).
Compliance refers in Europe community to MiFiD retail investors protection requirements including Articles 24 and 25 of the MiFID II Directive. Assessment of suitability and appropriateness become easy and straightforward. «When providing investment advice or portfolio management the investment firm shall obtain the necessary information regarding the client’s or potential client’s knowledge and experience in the investment field relevant to the specific type of product or service, his financial situation and his investment objectives so as to enable the firm to recommend to the client or potential client the investment services and financial instruments that are suitable for him». [ in : DIRECTIVE OF THE EUROPEAN PARLIAMENT AND OF THE COUNCIL (June 2014) on markets in financial instruments repealing Directive 2004/39/CE of the European Parliament and of the council. 2001/0298 (COD)] More informations about Suitability and Appropriateness Guidelines on www.mifidconnect.com. FCA (UK), AMF (France) and other European Authorities promote the content and spirit of this Directive. In Switzerland, FINMA insists on the duty of investigation (client's risk profile), information requirements (risk disclosure), due diligence obligations (updating the client’s risk profile). In other non European countries, even without specific regulations, prudential rules recommend similar ways of doing things.
Financial business concerned
From the above graph, it is clear that NERP is at the very quality core of Private Banking activity.
Retail Banking's Advisory Departments - as Insurance Companies, not only in Life Insurance - are in no different a situation and fall under similar prudential and regulatory provisions and client retail needs. But all should turn such provisions into factros of comptetitiveness! This is where we can help you. Call on uor
Insurance companies are also subject to protecting private investors, as most of them today have a line of business in the domain, i.e. insurance agents act as financial advisors to retail investors.
Asset managers, Portfolio managers within the family office and private wealth advisors will considerably benefit from using NERP.
NERP clearly reveals whether a financial asset is suitable and appropriate or not for a retail client.
A customized interface can be proposed.