Challenges of Brexit for IFA sector

While the politicking, further planning, to’ing and fro’ing continues around Brexit, and with less than two months to go, many of the possible outcomes will shape the next stage of how IFAs are prepared.

Following the UK’s vote to leave the EU, uncertainties revolve around a lack of clarity over the UK’s future trading relationships in goods and services (including financial services) with Europe and the rest of the world; changes required to UK legislation where it has followed EU laws; and the changes in rules on freedom of movement on people.

Independent financial advisers, financial advice and wealth management companies are needing to plan, think ahead, and prepare for the variation of outcomes. What changes will this make to the financial adviser and services market?

While it can be difficult to accurately predict how the financial markets may be affected by Brexit, there are some key areas that can be identified where changes are likely. But, as with all financial planning, your client’s personal circumstances are unique and individual to them, and the advice they seek from you as their financial adviser will take all circumstances into consideration – from pensions, mortgages and property, to investments and savings.

Regulation changes

Industry reports indicate that Brexit is likely to lead to adverse economic conditions for some time, and that there is the risk of market disturbances spread across borders and industries.

One industry person says, “There are aspects of Brexit that have been largely overlooked, such as the ‘digital single market’ – a set of arrangements that aims to cover such areas as data regulation, privacy and copyright that functions beyond borders. The UK had a big influence on its creation but is now on its way out, leaving many technology-dependant businesses with a huge level of uncertainty”.

Some EU laws included in UK law will remain, but others are less certain. Do you have a managed approach to your IT set-up in readiness to address any indeterminate changes? With data protection and privacy laws being a major concern, not just for the recent EU laws now enshrined in GDPR, but also it has become a fast-moving worldwide concern. Are your IT systems up to date and in line with all these requirements – including mobile device management?

What changes will this bring to your business?

Will your services, or your business model, need to adapt to limit the impact that the market changes may have on you? Can you respond quickly, with the backing of concise, up to date, and effective IT?

Industry insights show that some of the things to consider include managing adverse effects on your client’s portfolio and the ability to react to sudden issues, and the importance of instant communication with your clients. This can be done with a supportive back office system and client portal, with all information accessed in a touch or a click from anywhere. Does your business have an effective system in place to handle this client expectation in today’s tech-driven world?

You may also find a need to redeploy resources and staff to adjust to any upcoming changes. But you won’t wish to find yourself stretched too thin. This could compromise your ability to make decisions, or keep good relationships with clients and business partners who may also be having their own challenges to deal with.

What are some of the challenges facing financial advisers this year?

In the main, a changing regulatory landscape and market volatility are the key factors that run through current challenges:

• Clarifying financial planning (strategic) and financial advice (tactical) as more and more of the FinTech industries’ lines blur with increasing industry disrupters, which could be beneficial to IFA clients if it streamlines customer experience, is well informed, and where holistic decisions are made to their benefit
• New regulations to navigate – hot on the heels of getting GDPR in place for businesses and clients
• Advising through market events – as one industry person put it: “The adviser’s job is to help the client to ‘see through the noise’ and stay invested over the long-term – and not get distracted in the media excitement about the latest disaster.”

“Customer confusion may also play a factor as your clients themselves try to keep on top of changes in the market and regulations. Endeavour to remain a safe resource that they can rely on in uncertain times.”

As this article is being written, there is continuing debate in parliament, with the government seeking the withdrawal agreement to be reopened for further negotiation. As they say, ‘the show isn’t over until the fat lady sings’ and this shows no signs of abating any time soon over the coming months.

So, in the meantime, IFA businesses and the financial services market needs to continue to evolve its responses too, and to find the best ways to be prepared for the new era shortly ahead, whatever it may look like – from the immediate impact of a possible reduction in business and confidence, currency and market volatility; to a more long-term view in response to a final Brexit arrangement.

How can you stay firmly and fully prepared, yet be ready for adapting to quick changes?

Continue to uphold your integral business values and principles of trust, integrity, being a ‘safe pair of hands’, dependable, reliable, with solid roots and yet also in touch with changes in challenging times.

• Ensure that your company conduct continues to be impeccable, especially when it comes to keeping up with regulations
• Keep your clients informed and up to date in order to allay any confusion, and to bring assurance that you are the best financial adviser for them – a safe resource they can depend on in uncertain times. A client-friendly back office system and portal is good for this
• Make sure that all your operations, resources, and technology is robust and still fit for purpose to cope with being agile and adaptable

Even though there is still much uncertainty, and while Brexit may bring challenges, it can also provide an opportunity for you to continue to act in your client’s best interests, and strengthen your good standing with them for years to come.

Would you like to talk through your IT systems – from back office, cloud computing, hosting, firewall, to full cyber security and others? Email us at [email protected] – we’d love to help.