BrexitJul 17 2018

What wealth managers can do to get Brexit-ready

  • Grasp why planning for Brexit is not just a compliance matter and how it can be planned for.
  • Learn the biggest risks for wealth managers and advisers of leaving the EU, including identifying weaknesses.
  • Consider how to treat location requirements and maintaining cross-border client relationships.
  • Grasp why planning for Brexit is not just a compliance matter and how it can be planned for.
  • Learn the biggest risks for wealth managers and advisers of leaving the EU, including identifying weaknesses.
  • Consider how to treat location requirements and maintaining cross-border client relationships.
pfs-logo
cisi-logo
CPD
Approx.30min
pfs-logo
cisi-logo
CPD
Approx.30min
twitter-iconfacebook-iconlinkedin-iconmail-iconprint-icon
Search supported by
pfs-logo
cisi-logo
CPD
Approx.30min
What wealth managers can do to get Brexit-ready

No doubt there will be a competitive spirit for those Brexit-compliant firms in and outside the EU27 who bid for clients falling outside the scope of compliance for UK-based rival firms.

By doubling down on what you’re good at, and where firms may be best able to compete effectively in a post-Brexit marketplace, expect some hard decisions to be made.

If the choice is made to cut ties with EU27-based clients and continue to focus on the UK market, controls and education of client facing staff is key to ensure the firm has good 'know your customer' and client on-boarding procedures in place.

This is required to detect not only any new business that would bring the firm into potential non-compliance but also to monitor existing clients who move to an EU27 location. 

These decisions will be about understanding the cost-benefit analysis of maintaining relationships with clients.

The cost of re-papering so soon after Mifid II and migrating investors to new legal entities – including the additional requirements of new regulatory permissions or licenses – may prove prohibitively costly.

There are the data requirements to be considered too.

Management teams and boards looking at technological transformation should not do so in isolation of regulatory change. This goes for Brexit planning, too.

Firms need to revisit elements of data protection that may have not been relevant when implementing their GDPR programme, such as the need for an intra-group data transfer agreement between their UK (which will soon be a third country) and their new EU-based entity.

Additionally, if personal data will be transferred to third parties, such as fund managers and vendors, model contract clauses may need to be inserted in contractual agreements to ensure sufficient data protection safeguards are in place to transfer personal data to and from third countries.

While no-one likes to say goodbye, it may be more effective to relinquish certain investor relationships and focus on high-value business where delegation rights can be maintained.

This removes the cost of restructuring relationships – many of which have just gone through a similar process to become Mifid-compliant. It ultimately depends on how important a client is to a firm and whether you have a strong point of differentiation to serve EU27-based clients.

This goes beyond contingency planning: it is a philosophical question driven by regulatory change about the type of business a firm wants to provide, whether European or not.

Understand your reliance on the nuts and bolts

What will likely drive a commercial decision to cut your losses is understanding the operational consequences of losing or maintaining access to the EU27’s market infrastructure.

PAGE 2 OF 5