Unintended consequences

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Here, now 3 months into the COVID outbreak in the UK what are the issue for our Asset Management and Wholesale firms – goodness where to start?

From talking to a number of firms in the past weeks, it’s obvious that generally technology has stood up well to the new norm of WFH (working from home) and people have adjusted well. We have heard of desks being couriered to individuals so they can set up a more practical working environment (I’m lucky I had a office built years ago with big monitor screens and all the office paraphernalia I needed to replicate an office). Those lucky enough to have space can create this too. I have seen a lot of kitchens and bedrooms in Zoom and MS Team meetings with people obviously still hunched over laptops, which I suggest will bring a lot of work for osteopaths when they re-open.

Senior Managers are now however concerned that getting people back into the office will be the issue. In fact we have heard some of the big houses have already said that a return to the office is unlikely before 2021 as they are functioning so well. That means servicing for retail clients and those of who are distributors, is likely to be with someone working remotely for a long time to come.

it could be sometime before you feel the human touch that ironically many investors are craving at the moment.

As the larger firms, have on the face of it coped well, many are thinking about their business strategy and the potential and inevitable failure of some smaller entities will play into their hands. The vertically integrated (VI) models are looking for the opportunity to boost organic growth with acquisition. Whilst on one hand this could be a god-send for those who were completing selling up before the pandemic hit, there could be some who feel their hand is being forced and the reward for sale is limited due to the economic climate. But what does this mean for clients? Rather than dealing with friendly well known and likely local Adviser, they may receive a letter to say their investments and advice will now be provided by much larger entity whose Wealth division, whilst undoubtable much better prepared to cope with similar situations in the future, are likely to be utilising the funds, models and potentially even platform services of the group. Is that always best for the client? The suitability rules don’t go away under these circumstances, but isn’t part of the decision to entrust your wealth a conscience decision to “buy” the person sat in front of you? With the determination of larger firms to offer flexible remote working to employees, it could be sometime before you feel the human touch that ironically many investors are craving at the moment.

Merger and acquisition, I suspect, will be common place over the next few months into 2021 and it’s the larger VI firms who will benefit from this. However, how they manage it with the conflicts of interest that arise and the obvious drive from the FCA to ensure that at this time customers must be treated fairly, is a wait and see.

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Through our award winning training and consultancy partnership FSTP LLP we hope to become a trusted provider of services to client firms across Financial Services. Specialties: Training and consultancy, project and interim management from regulatory issues through to management development and board services. Chartered Member of the Chartered Institute of Securities & Investment

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