A blog by FinaMetrica, specialists in risk tolerance tools, caught my eye recently. It focuses on the furore around the EU’s Packaged Retail and Insurance-based Products (PRIIPs) regulation introduced as part of MiFID II in January and the issue around the use of KIDs – Key Information Documents.

The FCA states the aim of the PRIIPs Regulation is to encourage efficient EU markets by helping investors to better understand and compare the key features, risk, rewards and costs of different PRIIPs, through access to the short and consumer-friendly KID.

The contentious issue with the new regulation is that it calls for five years of performance data to be presented in a KID, a timeframe which, even by admission by the FCA it seems, can be misleading and defeats the object of having a document that is meant to add clarity when making a purchasing decision.

Fortunately, discretionary investment managers such as PortfolioMetrix are not in the scope of the KIDs regulation. What discretionary managers offer is a service to clients, not products. This means advisers who opt to work with a discretionary investment service are saved from the administration headache that the KIDs requirement places on them.

It’s a particular headache for advisers when there are changes to clients’ portfolios, as any new funds that are brought into the mix require the client to be sent the relevant KIDs.

With the FCA suggesting that the new five-year performance rule may need to be caveated to ensure investors are not misled by the data shown, it seems a lot of work for documents that many believe investors rarely look at in the first place.