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Fiduciary Duties (details of Mitsubishi UFJ Morgan Stanley Securities' initiatives)

Mitsubishi UFJ Financial Group (“MUFG”) has formulated and announced "MUFG Basic Policy for Fiduciary Duties"as a common guideline of the Group so as to enforce its customer-first undertakings.

In addition to adopting the "Principles for Customer-Oriented Business Conduct" established by the FSA, Mitsubishi UFJ Morgan Stanley Securities undertakes the following initiatives under this basic policy.

Ensure customer-oriented approach

Mitsubishi UFJ Morgan Stanley Securities (MUMSS) seeks to enforce, through training etc., judgment and behaviors among its employees based on the MUFG Group Code of Conduct and the MUFG Basic Policy for Fiduciary Duties. In addition, we will strive to improve customer satisfaction by gathering feedback from customers and implementing various measures based on their views in order to achieve the greatest benefits for customers.

Implementing customer-oriented consultation and provision of information

(1)Implementing customer-oriented consultation and provision of information

  • In proposing products, MUMSS selects products based on customers’ knowledge, experience, financial circumstances and transaction purposes. It strives to propose products that match customers’ needs based on their life stages and attributes. Particularly with elderly customers and customers with limited investment knowledge and experience it seeks to propose products with low risk.
  • MUMSS will provide timely and adequate follow-up services including providing customers with a market outlook, status of investments and other information needed for their investment judgment in such events where the market fluctuates significantly.

(2)Providing detailed information tailored to customers’ level of understanding

  • In proposing products, MUMSS strives to explain the products’ characteristics, risks and fees as well as market trends with easy-to-understand expressions and important information highlighted by such means as larger text and coloring and thereby to provide necessary and sufficient information. In addition, we utilize tablets and other devices to provide customers with easy-to-understand information. We strive to explain the returns, losses and risks of the product as well as the transaction conditions in an understandable way using simulations, diagrams, and other means.
  • When proposing products, we strive to propose products that better meet customers’ investment objectives and hold dialogues with customers as necessary on such matters as portfolio analysis and presenting model portfolios.
  • We rank products according to price fluctuation and other risk characteristics and offer and undertake sales of products that are appropriate for customers’ risk tolerances and other criteria. In particular, for products with high degrees of complexity or risk, we judge whether to begin solicitation according to criteria set for each product category, including customers’ product comprehension based on such considerations as age and investment experience. For some products, only highly skilled staff members are allowed to give explanations, so as to provide customers with more detailed information. Meanwhile, MUMSS applies a simple procedure to the sale of JGBs with limited risks to individual investors, including providing concise information.

(3)Improvement of transparency of fees so as to contribute to customers’ investment judgment

MUMSS will seek presentation that is more easily understandable to enhance transparency of fees for each product and provide in-depth explanations so as to contribute to customers’ investment judgment.

(4)Development of a performance evaluation system that reflects customer-oriented undertakings

MUMSS will inform executives and employees about customer-oriented policies and status, and strive to establish a performance evaluation system to evaluate comprehensive sales activities that contribute to customers’ benefits and needs. We have also introduced a performance evaluation system to evaluate expansion of the client base and sustained growth in the balance of assets under management in a balanced manner.

(5)Initiatives of investment education

  • We are working to enhance the contents of the company website to provide greater user-friendliness to a larger number of customers, including those with little experience in investing.
  • We constantly provide information to customers through pamphlets explaining investment matters, the online distribution of videos, and holding customer seminars.

Provision of line of products to meet diverse needs

(1)Provision of line of products to meet diverse needs

  • MUMSS will offer a diverse and high quality line of products that enables customers to select appropriate products according to their investment objectives and risk tolerances.
  • We will offer a product lineup including products with low risks or low fees so as to allow as many customers as possible including those with little investment experiences to utilize its services. It also seeks to improve convenience in the utilization of online transactions and periodic investment plans and thereby to allow customers of broad age groups to use its services.

(2)Selection of products that contribute to customers’ asset building and provision of sales procedures

MUMSS will select products and services that contribute to customers’ benefits from among many product designs proposed by a variety of investment management firms, insurance companies etc. while utilizing evaluations by external assessment agencies when necessary. In addition, we strive to implement the following undertakings so as not to give priority to the products of our business affiliated companies and not to recommend only products that generate high fees on sales when selecting, temporarily ceasing, suspending, discontinuing, resuming and selling products.

 At the time of selecting, temporarily ceasing, suspending, discontinuing, and resuming products

The products we handle are selected from among the same types of products taking into account the “selection points” noted below. Product selection is undertaken by the Product Selection Meeting, which also includes representatives from the second line of defense. From now on, we will enhance our efforts to reflect customers' opinions in the selection of products, etc.

<Selection points>
  1. Risks of products
  2. Expenses
  3. Performance
  4. The needs of the anticipated sales customers, appropriateness, and compatibility with the investment environment
  5. The complexity of the product structure, the level of difficulty in explaining products, and sales channels
  6. Structures for training and support for the executives and employees of sales companies by investment management firms
  7. Conformity with related laws and regulations

At the time of sale

We do not provide excessive incentives for handling products of our business affiliated companies in order to ensure that we propose to customers optimal products for their needs. In addition, in our performance evaluations of sales staff we do not give preference to sales of products of our business affiliated companies over those of non-business affiliated companies. Furthermore, the second line of defense, in order to maintain appropriate proposals activities for customers, undertakes periodic inspections to ensure that preference is not given to sales of products that generate high fees.

Provision of financial services leveraging the Group’s consolidates strength

  • To meet customers' diverse needs, MUMSS strives to make proposals that leverage the consolidated strength of the MUFG Group and Morgan Stanley. We will also enhance development of organizational structures that respond to customers' diverse needs and continue to make proposals reflecting customers' intentions to satisfy their changing needs.
  • MUMSS makes comprehensive proposals not only on investment products but on support for inheritance and succession according to customers’ life cycles and needs.

Establishment of a structure enabling comfortable, secure and safe transactions

  • MUMSS seeks to improve customers’ convenience based on the notion of “open innovation” by proactively utilizing technologies and ideas that it acquires from Japan and other countries in cooperation with external companies and research institutions, including the introduction of new additional services and functions provided through digital channels.
  • MUMSS will seek to improve customers’ convenience as well as its proposals by utilizing tablets to provide investment information, simplify procedures and accelerate responses.
  • MUMSS, day by day, improves the security of its online trading and other systems to enable customers to conduct transactions with a sense of security.

Exertion of professionalism

MUMSS seeks to strengthen its employees’ knowledge and skills relating to products and investment environment and to enhance their professional expertise by providing them with training, encouraging them to obtain external professional qualifications, and enhancing training courses for professional development. In addition, we encourage staff in charge of visiting retail customers to acquire external qualifications such as financial planner (FP) and securities analyst. Seeking to raise the quality of executives and employees, we provide various training according to experience and seniority to reinforce knowledge and skills related to products and the investment environment. We are also preparing new training courses as part of our efforts to enhance human resource development.