When customers meet HSBC's wealth management staff, they are encouraged to provide facts to the financial planner or advisor to enable customers to identify and examine their financial needs. This will lead to mutually identifiable solutions based on real customer needs.

So why use such an adventurous sounding term like 'explorer' when we are talking about a financial planning process?

Wealth explorer or WEX, as it has been labelled, is a web-based software application which has been recently launched by HSBC Wealth Management.

The software has been specifically enhanced by a Far East software house to exacting specifications to provide HSBC Malta customers with the latest software-enabled financial planning and investment advice.

Among the significant advantages, the system includes total flexibility of processing financial data, enabling real-time "what if" scenarios for the customer, graphical representation of customer's assets before and after the financial planning or financial advice meeting, and detailed and sophisticated analysis through customised financial calculators. These calculators enable the customer to explore affordability versus identified needs.

Through the flexible structure of the system a customer can explore what effects parameters such as age and retirement age, disposable income, inflation rate, expected investment rate of returns, and risk profiles can have on income at retirement, maximum value of life cover, or protection cover, or the ability to save, or indeed what saving at certain levels can produce in a given period.

Consequently HSBC's team of financial planners and advisors can not only bank on many years of professional experience and their academic knowledge, but are now also able to exploit sophisticated systems to ensure that customers get the best advice or service that can be offered in the local market.

MIFID (Markets in Financial Instruments Directive) is a new directive from the European Union. It came into effect on November 1 as it has been locally transposed through changes to the Investment Services Act 1994, the Financial Markets Act 1990, and the relevant rules and regulations.

The wealth management teams in HSBC have been preparing for the changes brought about by the new directive for several months now. Among other actions, preparatory work involves working with MIFID working parties right across the EU, sharing best practice and providing assistance where required. The Malta team has been an active participant in the HSBC Group MIFID implementation project across Europe.

Here in Malta, a bank-wide team ranging from wealth management, IT, asset management, stockbroking and compliance, have worked together on MFSA guidelines and have met the implementation date.

Not all regulatory changes arising out of MIFID are new to HSBC Malta. Indeed the concept of 'suitability' is the mainstay of any investment advisory function. Suitability is a new aspect of the regulatory framework applicable to customers who receive investment advice or benefit from portfolio management services.

'Appropriateness' is another concept enshrined in MIFID. This concept looks at the investor's experience and knowledge relating to the investment product being considered. In reality, products can either be simple in structure and nature or else complex. Ultimately, the appropriateness test is designed to protect the customer.

'Client categorisation' is another aspect of MIFID which is also designed to protect customers. In broad terms, a customer can decide to have retail, professional or eligible counterpart classification. According to the client categorisation, an investment services provider will have to provide differing levels of protection varying from high (to retail customers) to lower (for professional and eligible counterpart).

Another very important aspect of MIFID is the inducements provision or the level of transparency of product charges which an investment service provider could levy. MIFID lays down very specific rules on disclosure of charges and policies.

MIFID also establishes several policies that must be afforded to the customer; foremost among these are the best execution policy and the conflict of interest policy.

These are some of the more important aspects of the new regulatory changes in the investment service area, which will most impact (positively) on investors large or small.

Mr Scicluna is head of wealth management at HSBC Bank Malta plc.