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  • Our clients expect us to know precisely what they want and expect of our products. Not the bare minimum, or a bit here and there, but absolute chapter and verse. Using their knowledge and experience, a good technology vendor can acquire a thorough understanding of a firm’s day-to-day operations relatively quickly. However, not every facet of the business of wealth management can be so readily quantified or absorbed—a prime example being regulation.

    Regulation is a moveable feast

    For wealth managers, regulation looms large and is ever present in all departments; it demands constant attention, consumes resources and is never actually finalised. No matter how capable a digital platform­ may be, interpreting new and sometimes ambiguous rules and directives as they evolve, and assessing the consequences of their implementation, is not its forte. You need people to do that.

    Client and vendor: in it together

    Service providers should be willing and able to offer informed and reliable support to their clients to help them deal with the regulatory issues they face. To provide sound advice on regulatory issues, the vendor must keep abreast of written guidance. That involves studying ESMA’s technical specifications, the FCA’s discussion and consultation papers, TISA’s research and PIMFA’s ‘bibles’ and maintaining a regular dialogue with clients.

    Information gathering through client gatherings 

    The most valuable contributors in the regulatory assessment process are those directly affected by it. Through client forums, service providers can agree with users of their systems how those systems need to behave—even when the regulation is unclear or yet to be finalised. By bringing together those who are responsible for running operations in different firms, insights emerge that would otherwise be overlooked. That information can then be disseminated across the software company’s client base to help system users stay operationally ready and prepared for whatever’s coming next. 

    Turning regulation to your advantage

    MiFID’s end of year reporting requirement is a prime example of how regulation can be used to gain a strategic advantage. Some wealth managers will see the obligation as nothing more than a box ticking exercise, whereas their more enlightened counterparts will use the occasion to engage with their clients—providing their service provider can source, generate and disclose reporting data that is informative, accurate and useful for their clients. 

    So, is your technology provider as involved in regulation as you are? And if not, why not?

    This blog post is based on Andrew’s recent talk at Compeer’s annual compliance conference – ‘preparing for the inevitable’ – held in London earlier this month, the conference disclosed findings from research conducted by Compeer and sponsored by JHC, based on interviews with more than thirty senior level risk and compliance staff, who oversee approximately £173bn of UK wealth management assets.