Perhaps unsurprisingly, staying on top of the regulatory burden is the main concern of chief executives of firms who are members of the Personal Investment Management & Financial Advice Association (PIMFA). 75% of CEOs cited regulation as one of the five things “keeping them awake at night”.

The Association’s annual CEO Sentiment Research Report suggests that the industry’s main regulatory concerns are:

  • Implementation of the Senior Managers & Certification Regime (SM&CR) from December 9 this year. Many of the respondents said that they are preparing for SM&CR by reviewing their processes and procedures and the culture of responsibility within their firms, and the report describes the Regime as “a large firm-wide project” for PIMFA’s member firms
  • Implementation of the European Union’s Markets in Financial Instruments Directive
  • Various concerns relating to the Financial Ombudsman Service
  • The costs involved with meeting regulatory requirements and the time taken to ensure these obligations are satisfied. Particular mention was made of the costs of collecting all the data the Financial Conduct Authority now requires from firms. Some respondents suggested there was an increasing conflict between the needs of clients and the obligations of regulators

The report classified cost control as a separate category from regulation, and 27% of respondents said controlling costs was one of their top five concerns. Many mentioned the rising cost of professional indemnity insurance, and this could also be said to be a regulatory issue.

47% of respondents cited IT issues as a major concern. Key areas of focus here include seeking to use technology to improve client interactions and access portfolio information more easily. However, perhaps the biggest technology-related concern is cybersecurity, especially as the public are becoming much more aware of data protection issues and want to be re-assured that firms will put in place adequate safeguards in this area.

57% said they were concerned about whether their firms could recruit and retain the best talent, given the current high employment rate. 62% were worried about the general economic climate and Brexit, but this is something firms have little control over.

As well as being asked to list the five main concerns keeping them awake, the chief executives were also asked to state what their three main areas of focus will be over the next 12 months. Here 67% of CEOs said regulation was a major area of focus; and 53% said they intended to grow their business through deepening existing client relationships, winning new clients and/or acquisitions.

The results were based on detailed responses from 36 CEOs of member firms and analysis of records of one-to-one meetings and firms’ executive committee meetings.

Gary Sunderland, Head of Research and Indices at PIMFA, said:

“The CEO Sentiment Survey gives a great insight into the minds of the people running the wealth management and financial advice firms in the UK, and at such a precarious time, as Brexit approaches, it is always beneficial to know how others in the industry are navigating market volatility, political landscape and regulatory environment.”

The information shown in this article was correct at the time of publication. Articles are not routinely reviewed and as such are not updated. Please be aware the facts, circumstances or legal position may change after publication of the article.