Wealth management bosses fear political fallout from Brexit

Report coincides with pound plummeting as Boris Johnson moves to suspend parliament

The publication of a wealth management and advice industry survey detailing the Brexit fears of CEOs has coincided with sterling plummeting amid Boris Johnson’s plans to suspend parliament.

Investment industry bosses are concerned about market, business and political uncertainties stemming from the failure of the UK and the European Union to secure a withdrawal agreement weeks out from the current Brexit deadline.

The views of 36 industry bosses were published in the latest annual CEO sentiment report from the Personal Investment Management & Financial Advice Association (Pimfa), which examines key areas of focus for businesses, plus what is keeping industry leaders up at night.

‘Costly preparations that would not otherwise be needed’

The survey found 62% of CEOs were “kept awake at night” by political and market risk.

“There are ever greater market uncertainties resulting from the continuing lack of clarity on Brexit,” the report said.” CEOs are worried about the prolonged period of inefficient and costly preparations that would not otherwise be needed, with some even citing this as a ‘bureaucratic failure’.”

It continued: “CEOs have voiced the need to possibly establish new EU based entities following UK’s exit from the EU. There are also general fears over a potential political fallout and change of government that could bring about a negative effect on the clients’ portfolio values and hence the firm’s revenue streams.”

Johnson pledges to suspend parliament

The report coincides with the government confirming it will suspend parliament for five weeks in early September before reconvening on 14 October, only 17 days before the UK is due to leave the European Union.

The pound slumped to $1.218 and €1.098 on Wednesday due to the increasing likelihood of a no deal Brexit.

Investment industry concerns beyond Brexit

Despite the precarious political situation in the UK, the investment industry still ranked regulation higher as a source of concern with 75% of respondents stating it keeps them up at night.

A less heavily regulated environment was cited as conducive to a happier workplace, the report said. “Excessive paperwork, now necessary in the sector, is also deemed very much a negative by employees and clients alike.”

Mifid II was dominating most of the industry’s time within regulation although the Senior Managers and Certification Regime (SM&CR) was also highlighted. “Compliance is no longer just the responsibility of those who work in the compliance department, everyone within the firm now has a role to play in ensuring that the firm remains compliant with the current regulations,” the report said.

A majority of CEOs (57%) said staffing another concern while 47% highlighted IT projects and upgrades.

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