thewealthnet: London remains a credible market place despite Brexit and regulation increases- Multrees roundtable

16 May 2017

Leading wealth management experts got together for a roundtable held by Multrees Investor Services, to strongly debate changes to the industry, in relation to Brexit, technology, culture, regulation and millennial mind-set.

The wealth management industry rest on three pillars, access to talent, a credible market place and a fair tax regime according to Alexandra Altinger, chief executive of Sandaire.

For Ms Altinger, Brexit, while creating uncertainty, is unlikely to impact London's credibility as a market place. Although the tax regime will change, she said, it will still be considered to be fair and not completely out of line with other jurisdictions, notably those in the EU. The main concern, therefore, will be access to talent as there is uncertainty around financial passporting which could make the industry less mobile.

From a client point of view, Ross Elder, managing partner of Lincoln Private Office, noted that there is a strong emotional connection to the UK. He said that global clients feel comfortable in the UK and with geopolitical risk going on elsewhere; people are more attracted to London despite uncertainties.

However, Mr Elder expressed concerns with regards to the feasibility of completing the Brexit negotiations in time. With the possibility of extended negotiations or a complete rupture from the EU, Mr Elder advises wealth managers, investors and firms to make decisions quickly and "look through the noise".

He added: "People will need high quality advice and you can still find that in London".

Chief executive of Multrees, Chris Fisher, believes that Brexit could be a positive for the wealth management industry. For him, it could create opportunity and freedom as the UK will no longer be tied to EU legislation and the UK can use Brexit as an opportunity to become more attractive.

Nigel Pilkington, chairman of Multrees, does not expect Brexit to bring much change with it: "Why would we try to change if we don't need to? The only reason to change that much is if we are forced to. The best thing we can do is maintain our strong and well respected regulatory and compliance standards."

Mr Pilkington warned that if the UK changes its standards, it might result in wealth managers not accessing potential clients or in clients withdrawing their money.

Non-executive director of Multrees, Hugh Mullan, also agrees that Brexit might not bring drastic change. He pointed to the fact that most fund managers already deal with a multi-jurisdictional model so asset managers are "geared-up" for Brexit. For him, Brexit remains "business as usual". Mr Mullan also considers that UK regulation is strongly in favour of the end investor compared to other countries from the EU.

Indeed, Ms Altinger believes that the UK is at the forefront of good regulation with more transparency and accountability being introduced.

She said: “I think the UK is at the forefront of this whole conduct risk mind-set and that's really powerful. I think conduct risk is about good corporate cultures and so I think it will become ever more important. I think the conduct risk mind-set or framework is what we're evolving too, so that you can't short circuit that. I think others will end up adapting to that to some degree for sure. I think investors will ignore at their peril.”

Partner at Stonehage Fleming, Matthew Fleming stated that there is a danger that increasing regulation is forcing wealth managers to be quite "samey" and are becoming less and less diversified.

Mr Elder also pointed to the risks, particularly for the front-end. He commented that regulation could be putting off wealth management firms from giving what is best advice in their opinion: "As a firm, we must follow the letter and the spirit of the law but our ultimate goal is to provide best advice."

As well as political and regulatory changes, technology and innovation is another big theme affecting the wealth management industry.

"Robotics is coming," said Mr Elder. "There will be huge advantages but it's going to be the businesses that have the relationships and distributions that are going to have to pick up these skill sets. There are some areas where technology will allow firms to bypass inefficiencies which allows managers to free up time."

Mr Fleming considers that the relationship that you build with clients is more important than how you technologically interact with them: "It is a tool for spreading information, but technology doesn't necessarily help you communicate."

In terms of target audience, Mr Mullan stated that there is not enough money in advice for the mass affluent market as the lower fees don't justify the regulatory process to give customised advice. For him, the mass affluent market will be revolutionised with a large part of the market being automated.