Compliance in Wealth Management

Written by CFTE’s Experts

In the past few years, regulatory bodies are working hard to develop new regulations in the financial industry. However, this has also led to increased challenges for wealth management firms and managers to meet their requirements.

Let’s dive into compliance in wealth management and associated challenges to get a better idea about it.

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GDPR in wealth management:

Wealth management firms need to get ready for GDPR compliance. GDPR, also known as General Data Protection Regulation, was enforced in the year 2018. This Compliance is meant to bring more rigor to the process of data management within the wealth management industry.
Even more, this regulation also comes up with a significant implication for the managers working in wealth management firms and any other firm that is dealing with business or personal data.
However, when it comes to GDPR compliance, then you must know that about a fifth of firms are still just preparing for the GDPR compliance. However, the ones who have started with GDPR are focused now on training their staff to ensure that their employees can understand the implications of the regulations.

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Wealth management firms also need to be prepared for increased scrutiny

With the suitability review, FCA is also shedding light on the industry of wealth management. Therefore, it has become vital for wealth managers to be prepared for FCA visits. However, more change is a surety, with GDPR, with MiFIDII, as well as an expectation of continuous growth in the wealth management industry’s regulatory requirements.

Challenges in Compliance on wealth management

When it comes to compliance with wealth management, there are multiple challenges that wealth management firms and wealth managers are facing currently. Here we have enlisted some of those for better understanding:

1. Meeting the deadlines of MiFIDII.

However, when it comes to getting ready for meeting the deadlines of MiFIDII, then there is a clear split between wealth management firms who are ready to face it and the firms who feel that MiFIDII might be harder.

However, this can be attributed to the lack of clarity perceived in the requirements. Due to this, MiFIDII is becoming one of the major challenges in Compliance for wealth management firms.

2. Inconsistent processes

Consistent compliance standards and baseline protocols are critical for compliance in wealth management. However, maintaining this is specifically challenging for widespread organizations.

3. Increasing costs

When it comes to compliance in wealth management, the increasing costs of managing compliance processes is another important challenge for wealth management firms at present.

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4. Changing standards of Compliance

Continuously evolving market trends are forcing wealth management firms to reevaluate their quality standards. It is because compliance can be hard to achieve without managing a regular review of the policy. 

Final Words

All of these things are making compliance in wealth management pretty challenging. However, opting for the right tools and help can help them make the process easier and more effective.

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