What factors to consider when in-housing compliance in Wealth Management?

Kelly BiggarResearch, insights & industry news

in-housing compliance in Wealth Management - Fram Search

What factors to consider when in-housing compliance in Wealth Management?

The decision to in-house compliance in wealth management requires careful deliberation and comprehensive planning. Here are some key things to consider.
in-housing compliance in Wealth Management - Fram Search

The wealth management landscape is changing fast and it’s a market where few firms have a USP. Whilst there is consolidation, many firms are growing fast under the radar and away from buy-outs. It’s an industry where trust and regulatory adherence reign supreme, and the decision to in-house compliance is a big one for many firms given so many in the sector are SMEs. With over 27,000 advisers dispersed across approximately 5,000 firms, the strategic move to internalise compliance operations requires a nuanced approach. Beyond the apparent cost considerations lie a plethora of factors that must be weighed carefully to ensure a seamless transition and better outcomes.

First and foremost, the size and structure of the wealth management firm play a pivotal role in determining the feasibility and efficacy of in-housing compliance. SMEs, in particular, may find themselves grappling with limited resources and expertise, making the prospect daunting. However, with proper planning and investment, even smaller firms can reap substantial benefits from bringing compliance functions in-house.

One crucial factor to consider is the level of control and oversight afforded by in-housing compliance. By in-housing these operations, firms gain greater autonomy in tailoring compliance protocols to their specific needs and risk profiles. This customisation facilitates more effective risk management and ensures alignment with the firm's overarching goals and values. Moreover, direct oversight allows for swift adaptation to evolving regulatory requirements, minimizing the risk of non-compliance and associated penalties.

Another significant consideration is the impact on organisational culture and employee engagement. In-housing compliance fosters a culture of accountability and responsibility, as all staff members become actively involved in upholding regulatory standards. This heightened awareness can enhance overall compliance culture within the firm, instilling a sense of ownership and commitment among employees. Additionally, integrating compliance functions into existing workflows promotes collaboration and synergy across different departments, ultimately driving operational efficiency and client satisfaction.

Furthermore, in-housing compliance can yield long-term cost savings and operational benefits. While the initial investment may appear substantial, especially for SMEs with limited budgets, the potential for cost reduction over time is significant. By eliminating reliance on external compliance providers or consultants, firms can mitigate ongoing expenses and streamline internal processes. Moreover, a well-established in-house compliance framework can enhance the firm's reputation and attractiveness to clients and investors, leading to sustainable growth and profitability.

However, despite the myriad advantages, in-housing compliance also presents its own set of challenges and considerations. These include the need for ongoing training and professional development, the risk of staff turnover impacting continuity, and the necessity for robust technology infrastructure to support compliance operations effectively.

The decision to in-house compliance in wealth management requires careful deliberation and comprehensive planning. Beyond mere cost considerations, firms must assess factors such as organisational structure, culture, and long-term strategic objectives. While challenges may arise, the benefits of in-housing compliance - including enhanced control, cultural alignment, and cost efficiency - can position firms for sustained success in an increasingly complex regulatory environment. By navigating these factors thoughtfully, wealth management firms can embark on a path towards greater compliance effectiveness and operational excellence.

Fram has worked with a number of wealth management firms who have been through a rapid growth journey and are well placed to advised on a range of factors. Please contact Kelly Biggar, Director, for more information on 01525 864 372 or email [email protected]

About Fram Search

Established in 2010, Fram Search is a specialist financial services recruitment consultancy. We focus on mid-to-senior hires in the UK and internationally.

We provide high quality contingent and retained recruitment services to boutiques and global brands. We have long established relationships, outstanding market knowledge, and access to deep talent pools. Fram takes a highly consultative approach, combining outstanding tech with a human approach. We are proud that our contingent fill rate is nearly three times the industry average and we augment our retained search methodology with rigorous psychometric testing. We take ESG seriously, we are champions of diversity and all staff have undertaken unconscious bias training. We also carbon offset.

Please contact us on 01525 864 372 / [email protected] to learn more.

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