Hedge funds and other financial institutions are reportedly stepping up their efforts to attract wealthy individuals to their wares in advance of the enactment of the European Union’s Markets in Financial Instruments Directive. Beginning in November 2007, hedge funds and other complex instruments will be off limits to investors unless they meet two requirements: they have at least 500 million to invest and they will conduct at least 40 trades a year, thus classifying them as professional clients. But, Financial Times reports, the U.K.'s Financial Services Authority has created a loophole that apparently many financial advisers, managers and banks are likely to jump through: The FSA will allow them to grandfather existing clients who don’t currently meet the requirements in order spare these firms of the red tape that will come with the effectiveness of the directive. Once Mifid comes into force, Ash Saluja, a partner in the London law firm CMS Cameron McKenna told the FT, it will be much more difficult for firms to place these wealthy individuals in the mid-tier bracket of professional clients and therefore the riskier financial products could be off-limits. All which seems to puzzle financial planner Julie Lord of Cavendish Financial Management. This attitude of putting people into boxes is what the FSA is trying to protect individuals against, Lord said in an FT interview.
