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A head and shoulder image of Loiuse Usher, head of SA relationship management at Credo Wealth.

LOUISE USHER, HEAD: SA RELATIONSHIP MANAGEMENT, CREDO WEALTH | MARCH 2020

Advice migra(ne)tion:
A Perspective

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A modern, curved abstract white building, with a blue curved glass facade and a white staircase at the entrance.

Unfortunately, giving advice to foreign residents often requires a change in mindset, regulation and service provision for you, the Wealth Manager.

Having worked in an independent SA wealth management business, I know that relationships with clients run deep. Perhaps frivolous to any reader who is a Wealth Manager themselves , but these relationships, forged over many years and many life events are more than just transactions. The result: you run alongside the client in the long journey involved in the emigration decision and implementation, but what then? When the client becomes a foreign resident, does the relationship stop? Should it stop? Unfortunately, giving advice to foreign residents often requires a change in mindset, regulation and service provision for you, the Wealth Manager.

As a UK domiciled firm, Credo Wealth has extensive knowledge and understanding of the UK advice landscape. To give you a sense of what it means to become regulated to give advice in the UK and to a UK resident, the following is a high-level guideline:

  • You will be required to obtain regulatory authorisation from the Financial Conduct Authority (the UK equivalent of the South African Financial Services Conduct Authority);
  • Such authorisation will consider your skills and experience, as well as qualifications, including regulatory exams;
  • You will need the necessary operational structure and people within your business, such as the appointment of a Compliance Officer and ensuring the requisite policies and procedures are drafted and put in place;
  • You, and the company, will have be domiciled in the UK; and
  • Assuming all the requirements are met, the time to market including authorisation can be up to 12 months.

This can be daunting. An alternative, however, is to consider utilising the services of a regulatory hosting provider. I hear a bit of a murmur, hosting.... that sounds fishy! Rest assured, it's not. There are several firms in the UK who have been in existence for many years whose core and only business is to provide an outsourced solution for Wealth Managers.

These regulatory hosting firms essentially provide Wealth Managers with a comprehensive advice capability suite. The result is that the Wealth Manager can obtain the required regulatory umbrella to give advice, as well as manage its own advice business. This means that the Wealth Manager is compliant in a manner that doesn’t necessitate investing in the complete end-to-end infrastructure.

A view from the top, looking down the inside of an office building with brown laminate floor, white walls and escalators at its center.

The result is that the Wealth Manager can obtain the required regulatory umbrella to give advice, as well as manage its own advice business.

So, what does it actually mean, and what do these regulatory hosting companies provide?

  • The regulatory hosting provider allows the Wealth Manager to use its advice permissions whilst allowing you to retain your brand, revenue stream and advice proposition;
  • The regulatory host provides some of the required people, including a Money Laundering Reporting Officer, Compliance Officer etc;
  • The regulatory host provides policies and procedures assisting with overall governance and the monitoring of your business and the advice you give;
  • The regulatory hosting provider can assist with introductions to various product providers; and
  • It should be noted that you will be required to set up a UK entity and satisfy the mind and management principals.

But let’s take a small step back. What is the real opportunity here? It allows a Wealth Manager to be up and running in a relatively short space of time: approximately 4 to 8 weeks, 2 months vs 12 months. More importantly, the regulatory hosting route ensures you can continue to focus on your clients.

What’s the catch, you ask? It certainly is not cheap and will include a step-up cost (up to £10,000), as well as a monthly ongoing monitoring fee (in the region of £7,000 per month). Rest assured, we aren’t flippant about the undertaking. It is big. But then again, so is the opportunity. South Africans like South Africans, yes? You only need to take a stroll in Fulham and see the South African shop and support for their wares – and it isn’t all about Mrs Ball’s chutney or Ouma rusks!

The prospect of providing advice to foreign residents (ex-South Africans) leads nicely to another priority for many Wealth Managers: being able to develop a truly international income stream. Perhaps a topic for another day.

In conclusion, there are investment solution providers, such as Credo Wealth, and product providers, such as Momentum Wealth International, that can assist with your clients’ international and offshore domiciled investment portfolios. Enabling you to give the advice when your client becomes resident in a foreign regulated jurisdiction is somewhat more complicated.

In our view, we’d love to see more South African Wealth Managers in the UK market. Please do get in touch, come and have a cuppa. Whilst Credo Wealth do not provide the regulatory hosting services ourselves, we can at least share some of our local knowledge and experiences.

Credo has been managing global investments for over 20 years and currently has more than R65bn assets under custody of which R23bn is under discretionary management. Located in the United Kingdom with representation in South Africa, Credo provides private wealth, wealth platform, global trading and multi-asset investment solutions.

1 AfraAsia Bank, South Africa Wealth Report 2019

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About the author

Louise Usher, Head: SA Relationship Management

Louise joined Credo as in September 2019. Having worked in financial services both in South Africa and the UK for the past 22 years, Louise brings a deep understanding of international investing and a passion for always keeping the focus on the client and meeting their stated goals and objectives. Louise holds a Bachelor of Arts (Law) from the University of the Witwatersrand, and a Postgraduate Diploma in Management (Business Administration) from Wits Business School. Louise has held several directorship positions, both in South Africa, as well as the Channel Islands.

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