Regulatory and legislative change, the rise of robo-advice, consolidation among intermediaries and an ever-changing client base – it is no wonder that solutions providers such as Pershing are looking to a bright future. Part of BNY Mellon, New Jersey-based Pershing describes its offering as execution, settlement and a custody business.
For adviser clients, it also provides what it describes as practice management support, aimed at “enhancing their business and client experience”. “We sit in the value chain as the back and middle office for these firms,” says chief executive officer Mark Tibergien. “One of our key strengths is our particular focus on regulatory and client money responsibility. We do not offer financial planning or discretionary investment management – we do not compete with our clients. We focus on what we are good at – the trading, custody and regulation, freeing up clients to focus on serving their clients and growing their businesses.”
Heavy hand of regulation
Regulation in particular sits at the forefront of wealth managers’ agenda today, with the latter part of 2015 proving to be a particularly busy one for the FCA. In November, the regulator unveiled details of its study into asset manager competition, focusing on how firms deliver value, whether they are motivated and able to control cost and the impact of investment consultants.
Then, in December, its latest thematic review found around six in 10 clients of wealth managers and private banks are receiving unsuitable advice. This scathing report came just weeks after FCA chairman John Griffith-Jones spoke of a “less is more” approach to wealth manager regulation, recognising the legislation from both the UK and Europe is creating issues for compliance, management and systems in equal measure.
For Tibergien, financial professionals today must pay particular attention to transparency, objective advice, reasonable price and promoting a culture of ethical behaviour, regardless of regulatory requirements. Among the big issues, he believes, is the safety of client money and assets, which advisers can manage themselves or outsource to companies such as Pershing.
Another is preparing for Mifid II, with the second incarnation of these rules to apply from January 2017. As discussed previously in Portfolio Adviser (November 2015, p62), wealth managers will need to look closely at transaction reporting, cost disclosure arrangements and how they report to clients.