Regulation  

Five things advice company acquirers are looking for

  • To learn about how to prepare one's company for sale
  • To understand what are the main drivers to the due diligence process
  • To learn about what makes a company more attractive
CPD
Approx.30min

On the other hand, there are a number of telltale signs that are sure to create a bad impression of your company’s standards; for example, poorly structured reports that are full of unedited, irrelevant standard paragraphs and risk warnings that contain typos and bad grammar do not demonstrate a commitment to clarity and transparency.

Crucially, sub-par suitability reports make it difficult for an external reviewer to understand what you are recommending to a client and why – the cornerstone of any financial advice company. 

What else might an independent regulatory specialist notice when reading your client files? Ask yourself: 

• Are your fees disclosed clearly and compliantly?

• Is there an ex-ante aggregated costs and charges disclosure for new clients taken on post-Mifid II?

• If a client file contains evidence of client dissatisfaction, is that reflected in your complaints register?

All these things can be indicators of the general attitude towards compliance and clients at your company.

Compliance control framework

If your firm is taken over, the chances are that you would use the acquiring company’s compliance-related policies and procedures.

Arguably, the state that your current control framework is in should not matter too much.

Nevertheless, we would usually take a look at some of the basic controls you would expect to see in an advice company in order to assess how seriously you take your regulatory obligations.

With that in mind, there are a few things you can check to prepare for an independent reviewer: 

• What would they make of your financial promotions register and sign-off process, and are you confident that your website and client-facing literature is compliant?

• What would they make of your complaint handling and conflicts of interest registers and procedures?

• What would they make of your compliance monitoring programme, and associated management information, which shows: a) that you (or the external compliance specialist you use) are regularly doing the monitoring; and b) what actions you are taking to address any failings identified?

• What would they make of your training and competence records for your financial advisers, including whether advisers specialising in certain areas are doing continuing professional development and keeping their technical knowledge up to date?

If you have not done so recently, consider asking an independent regulatory specialist to give you a compliance health check before you put your business up for sale.

Attitude towards clients 

When we conduct regulatory due diligence, we always make a point of interviewing the key individuals in the target company who are responsible for the direction of the business and the compliance arrangements.

CPD
Approx.30min

Please answer the six multiple choice questions below in order to bank your CPD. Multiple attempts are available until all questions are correctly answered.

  1. What happens to a deal if the findings from regulatory due diligence on a deal are poor?

  2. What has got to be the main focus of any regulatory due diligence?

  3. How will the advisers be tested individually?

  4. How can an independent regulatory specialist gain clarity about issues or concerns that are identified from the client files or compliance records?

  5. It is recommended to ask the following, true or false: How do you make sure your advice fee structure is fair and consistently applied across your client base and across different advisers?

  6. What will go a long way to convincing external reviewers – and by extension, the potential purchasers that you are fit for acquisition?

Nearly There…

You have successfully answered all the questions correctly, well done!

You should now know…

  • To learn about how to prepare one's company for sale
  • To understand what are the main drivers to the due diligence process
  • To learn about what makes a company more attractive

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