How does MiFID II impact content marketers? Here’s an analogy.
You’re working away nicely until one day, you get a new boss. The new-kid-on-the-block is formidable and starts to make your job a lot tougher. No more LOL cat emails, no more social chats round the water cooler and no more biscuits at your desk – the crumbs are just ‘totally unprofessional’ (apparently). Management has spoken and there’s no room for discussion.
The rules seem tough. You think of quitting, but with time you become more and more accustomed to this iron-fist leadership style. Life’s not so bad after all right? Right!
So what are we getting at?
MiFID II: Embrace change
Change in any working environment can be a little daunting. It can also be incredibly infuriating, but that doesn’t mean you should throw in the towel and skulk off to a darkened room for the rest of the day. Oh no. It means you have to work a little harder and adapt.
When it comes to MiFID II, you really have no choice but to comply – after all, the wide-ranging and unforgiving financial regulations that came into force on 3 January 2018 are not going away. They’re purposefully designed to govern investment intermediaries and the trading of financial instruments in the European Union, so it’s essential to read up on compliance and to know the rules inside out.
The updates to the original MiFID I framework will affect all businesses that provide investment services and activities including investment firms, market operators and data service providers – but for the purpose of this article we’ll be looking at how MiFID II impacts content marketers. Hopefully you’ve been planning for some time and the updates won’t come as a surprise. If they do you’ve got a lot of work to do. If you’re just generally a bit swamped by everything, we’re here to help you out.
MiFID II and Content Marketing: What’s New?
There have been significant changes when it comes to research and the intricacies will have an effect on content marketers – so what’s new? Well, due to ‘research unbundling’ rules, financial companies including brokerages cannot send research out to their cliental for free. Instead, customers need to pay for the research they get. There are two things to bear in mind here:
Companies will need to focus on distinguishing research from content provided for marketing. If content is released publically and does not include any detailed investment information it is unlikely to be considered ‘research’ under MiFID rules. That said; thought leadership content targeting those about to make important investment decisions needs to be carefully worded and structured. It must avoid containing any information or statistics that should technically be paid for under the updated regulations.
Marketers will need to communicate clearly with clients to ensure they understand all relevant charges including research costs. Marketers/PR gurus must also be able to deal with the reactions of clients who may or may not be impressed with additional financial obligations they now face. When talking to retail clients in particular, content marketers should be careful to avoid overly complicated jargon that those in the finance sector take for granted.
While MiFID II might just seem like a pain in the neck at the moment (remember it will all get much easier with time), the new legislative framework has a very clear objective: to improve the integrity, fairness and efficiency of financial markets. And this requires transparent communication.
Marketing is all about keeping your clients updated and informed – but as you know by now you can’t just say whatever you like when it comes to financial instruments. There are very strict rules to follow and who you are talking to will also govern your marketing approach.
Things to consider when addressing retail clients
- Risk warnings. The importance of risk warnings has been seriously ramped up under the new MiFID II regulations. When talking to retail clients, you must always give a fair and prominent indication of any relevant risks when referencing any potential benefits of a service or financial instrument.
- Prominence and formatting. Risk warnings are not new to the finance sector. That said; updated rules mean that the layout and font size of risk warnings should make them as prominent as the rest of the text. In other words, you can no longer hide a warning in a font that’s barely legible just to make the rest of your text more attractive or persuasive.
- Language barriers. All finance-related information should be presented to the client in the language of their choice and not changed half-way through correspondence.
- Future performance statements. Information on future performance will need to become far more detailed in future, including information on how investments might perform in both strong and weak market conditions.
- All content produced for marketing purposes must be fair, clear and not misleading. The new MIFIDII rules mandate all firms such as research providers, investment banks, credit institutions, and brokers to disclose all relationships with the companies they mention. The rules ask the participants to act honestly and fairly, disclose obligations, and avoid all conflicts of interests.
Things to consider when addressing professional clients:
When communicating with professional clients, content marketers need to take a much more prescriptive approach. The rules have tightened and now the rules applicable to retail clients apply to professional clients too. With this in mind, all communication with clients should be reviewed to ensure it complies with the recent MiFID II updates.
There’s also a host of other very in-depth specifics that you need to clue up on when addressing professional clients such as giving prescribed warnings and disclosures. Whether you’re giving past performance information or future performance information, for example, you must include the effect of commissions, fees and other charges.
As previously mentioned in our MiFIDII and Content Marketing – The Broker Checklist article, brokers are now responsible for the messaging put out by their partners or affiliates.
One way to avoid non-compliant messaging is to take back control of your partner’s marketing activities. Instead of giving them a free reign to write on your behalf, try to provide them with complaint, approved material to distribute on their social media channels. Of course, this will mean more time needs to be spent on producing high-quality content marketing material, but it’s worth it to make sure you won’t get hit with an unimaginable fine somewhere down the line – or worse.
MiFIDII: A Whole Lot of Content
As you can see, MiFIDII requires a whole lot of content. Not only do your existing marketing materials need to be carefully reviewed and tweaked to ensure they’re in line with all the recent updates, but you also need to sculpt content that’s relevant, up-to-date and laced with all the relevant disclosures depending on your target audience. It’s no easy task and is certainly a lot of work for big brokers with an extensive client base.
Feel your heart racing already? Struggling to implement the MiFIDII regulations into your content marketing strategies? Then talk to the Contentworks team today.