It is tempting to believe that banks are only in the business of selling additional products, so questions about your financial set-up, or whether you have dependent children, might appear a not-so-subtle means of stealth marketing.
However, this isn’t necessarily the case. Under MiFID II, financial services companies are obliged to assess the suitability and appropriateness of every financial product to the customers who use it. For example, we need to assess our clients’ “ability to bear losses” and their tolerance of risk. To do this, we need to know more about you, in order to understand what financial products are right for you.
Suitability needs to be measured at an individual product level, but also in context of your financial portfolio and assets as a whole. This requires us to know what investments and financial products you hold elsewhere so we can judge whether your investments with us are suitable both on their own and as part of your overall financial position.
We also need to gauge our clients’ understanding of financial products so we can classify them as either retail, professional or eligible counterparties. This will influence the type of products we are permitted to offer you and the support that needs to be provided with those products.