RegulationJan 23 2019

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
  • 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
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
Five things advice company acquirers are looking for

• 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.

This gives an independent regulatory specialist an opportunity to ask about issues or concerns that are identified from the client files or compliance records.

Additionally, we also ask questions about a company’s culture and business model and its approach towards compliance.

Examples of questions we tend to ask include:

• How do you make sure your advice fee structure is fair and consistently applied across your client base and across different advisers? 

• How do you take the impact of all aggregated fees and costs on the viability of clients’ portfolios into account?

• How do you ensure clients receive value from any ongoing service they pay for, including your controls over the delivery of annual advice reviews?

• How do you build investment portfolios for your clients? How does your centralised investment proposition work? How do you identify clients it is not suitable for? 

• What target market analysis have you done on your advice services and investment propositions, and how do you know your advisers use it in practice to decide which services and investment solutions are suitable for which clients? 

• Where does your client risk-profiling methodology come from? How has it evolved over the years to take account of the Financial Conduct Authority’s good and poor practice guidance? What alternatives have you considered?

• How did you prepare for major regulatory changes (such as Mifid II and General Data Protection Regulation) and what changes did you make?

Of course, there are lots of other questions you could be asked; it is impossible to predict them all in advance.

But that does not mean you can not be prepared. You could brainstorm potential regulatory due diligence interview questions internally with colleagues, or perhaps ask an external expert to conduct a mock interview. 

If some of your answers are a bit flimsy or unconvincing, you could consider what more you could do to convince an independent observer that you are committed to complying with your regulatory obligations, and that you always put the best interests of your clients front and centre of your work for them.

PAGE 3 OF 4