Introduced by: James Rainbow, Schroders
Expert: John Chapman, Owen James
Facilitator: Michael Riley, KPMG
- The common theme is that regulatory change is still driving a certain level of M&A activity
- However regulatory change is becoming ‘the norm’ rather than a one-off event
- This means companies (large and small) are becoming used to preparing for regulatory change as part of their business’s usual activities
- There was the view that historical changes (e.g. RDR) were aimed at the smaller firms at the front end of distribution whereas more recent regulatory reviews / themes seem to be focusing on other parts of the value chain where the larger corporates operate e.g. asset managers, platforms, etc.
- The discussion took place the week after the FCA released its “Asset Management Market Study” so there was a brief focus on the impact on asset managers and then a longer discussion about the potential impact on platforms
- Asset managers are seen to be reacting to contracting revenue margins and are already pursuing their own strategies e.g. Standard Life / Aberdeen merger, Aberdeen / Parmenion transaction, Schroders / Benchmark transaction
- The more focused discussion was on platforms with comments like:
- The ‘focus on lack of price competition in the platform market when most platforms are already loss-making’ versus
- ‘Although most platforms are loss making, the fees paid by customers are principally for the benefit of advisers and still should be driven lower’
- The discussion then moved on to MiFID II where the general view was that the regulations were still unclear:
- Where does the burden fall? On asset managers or on the financial advisers?
- How far does the regulation go? Down to an individual customer basis, an individual financial planning firms basis or an individual fund basis?
- Most participants in the room would like to see the level of regulatory change decline in order for firms to consolidate their positions but nobody thought this would happen anytime soon
- Instead the view was that the evolving regulatory environment would continue for the foreseeable future on various parts of the wealth management value chain
- Another prevailing view is that the regulator could be clearer on regulatory changes sooner so that firms were clearer on what the intentions were before implementation – this was specifically around MiFID II where there seemed to be a general level of confusion (and potentially frustration) around its impact and implementation