PortfoliMetrix launches PROD toolkit for advisers

Investment manager PortfolioMetrix, has produced a toolkit for advisers yet to develop a PROD approach that will help satisfy the regulator.

The Product Intervention and Product Governance Sourcebook (PROD), came in as part of MiFID II and advisers should already be compliant. However, due to what PortfolioMetrix believes is perceived complexity, many advisers still have this work on their ‘to do' list.

Ben Peele, Managing Director of PortfolioMetrix UK, says: "Before producing our toolkit, we consulted with groups of advisers to find out their issues with PROD compliance. We also engaged with some experts on the subject, including representatives from Diminimis, The Timebank, Threesixty Services and Compliancy Services.

"What we discovered is that advisers find the process daunting and perceive it to be complex, while the experts are warning that the regulator is likely to clamp down hard on any advisers they find are not complying with the regulation."

PortfolioMetrix believes there is a shortage of material that offers practical guidance on how to achieve PROD.

Peele says: "Advisers who have completed the process told us it's very easy to get lost in the finer details, which makes implementing an effective solution tricky. Keeping it as simple as possible is key and it's essential to find common ground among your clients or you will end up with as many segments as you have clients, which quickly makes the process unwieldy. As we outline in our toolkit, the key to simplicity is having a structured, repeatable process."

The toolkit, entitled A ‘PROD' in the Right Direction, covers the process from start to finish.

It includes:
• Target Market Assessment: deciding how to segment clients.
• PROD Methodology: a ‘how to' guide to get your business PROD ready.
• Your PROD Approach: how you can structure the process to meet your needs.
• PROD Policy: what you should document for your specific business.

Three key points highlighted in the toolkit that advisers should note are:
• PROD is a set of rules, not guidance.
• Advisers cannot delegate responsibility.
• Advisers who fail to implement PROD effectively face the prospect of being severely punished by the regulator.

Peele says: "While it may sound daunting, it's not all bad news. Implementing a successful PROD approach helps better manage expectations between advisers and their clients. It also provides an ideal opportunity for good advisers to differentiate themselves from the rest."