Beware guru’s bearing gifts is the phrase, and as an industry that has always demonstrated resilience, a focus on what the financial services industry can influence rather than reliance on third party sources is undoubtedly a helpful tactic as we head into revoking article 50 and leaving the EU.
With the Prime Ministers latest announcement, we now have the latest on the type of BREXIT that may emerge over years ahead. It’s looking hard not soft which means no access to the single market and a repeal bill revoking 1972 European Communities Act to give EU powers in Britain
So what are the pro’s and con’s for our industry, our business models and clients?
1. Industry confidence: there are plenty of ‘dark nights for the soul’ coming up where business BREXIT steering committees will be coming up with differing solutions on how to manage a hard BREXIT. Some ideas we have facilitated across board meetings allow firms to assess ‘what if’ scenarios and play them out against the market sentiment. Thus we have:
- A requirement for ensuring passporting activities to remain which means the government ensuring the UK has third country rights which fulfil passporting benefits i.e. establishing a presence abroad and
- UCITS are integral to the UK wealth management industry, a fast answer is then required on continued marketing of those funds domiciled in the EU
- Tax affairs require attention. VAT is an obvious issue where the UK could blend in different levels or exemptions are drafted in. There could be an import VAT for goods to the EU. With the EU pushing for a harmonisation of Corporate income tax or Common, Consolidated Corporate Tax Base, with UK sovereignty and the push for lower corporate tax rates, this could benefit SME’s
- Consistent and committed regulatory environment: This is essential to manage turbulence and expectations. If the regulator can provide enough carrot (along with a smaller stick) then a predicted ‘brain drain’ of talent can be avoided and businesses can be confident they can continue to practice is a stable environment.
- With the FCA demanding data storage in the EU, data privacy and cross-border data management need careful attention
- Low-interest rates and annuity rates means there needs to be a focused and specialised retirement proposition for those firms offering retirement planning
- There is going to be ‘distribution turbulence’ post BREXIT, so assessment for the impact process on investment decisions and capital requirements is required
- Client communications need to be smarter than ever before. They need to focus on the value of the services offered, this means financial advisers should play on the excellent work they place into developing close client relationships and the value of planning and advice.
- Service and investment propositions should go back to basics and offer our ‘QVDT’ message:
- Quality: Due diligence on professional fund management portfolios and investment propositions to ensure they meet the desired characteristics to meet client needs
- Value: Service propositions that offer reassurance to clients at this time will offer high value moving forward and may charge accordingly
- Diversification: This is the blueprint of a quality and value driven centralised investment proposition and one that can ride any BREXIT uncertainty that will follow
- Time: Time in the market verses timing the market is the old adage and applies just as much now as it has always done
3. Client Engagement: With the above points in mind, the industry now has a responsibility and an opportunity to meet client concerns and needs like never before. They need to answer the ‘what’s in it for me’ question. By focusing on professional best practice, soft skills and specialist services, clients will be able to feel heartened by a service that can put their mind to rest.
- Professional practice: By ensuring efficient and streamlined operational practice firms can now service their clients more efficiently than ever before.
- Online client portals allow 24/7 interactions with secure and recorded messaging.
- Open API’s that allow integration of technology across the business so data is clean and can flow easily providing meaningful MI
- Designing a digital client framework to ensure seem-less services across online and offline, manage DIY clients and incorporate the very latest technology will ensure client concerns and needs are met head on
- Interpersonal skills: They are often overlooked and discounted but whether offering online or face-to-face services, firms need to ensure their CRM’s have the very best soft skills. Emotional intelligence is the best benchmark, ensuring self-awareness, self-regulation, motivation, empathy and social skills are constantly utilised.