To mark the sixth anniversary of the UK’s 2016 Brexit vote – resulting in a win for those that wanted to leave the European Union – International Investment’s Gary Robertson speaks with Victor France, Group CEO of Dublin-based Advice Company Abbey Wealth.
France reveals how the initial disappointment of seeing the UK vote to leave the European Union turned into an opportunity and a unique selling point for his business that has served Abbey Wealth well ever since….
France (pictured below) believes that there is a “double opportunity” for quality firms with an EU and UK presence.
“Brexit presented a major opportunity for high quality EU-based advice firms to collaborate with their UK equivalents in providing a continuation of financial planning and wealth management services to the 10% of UK advisers’ clients who are not resident in the UK,” he says.
“But very little has been talked about the opposite of Brexit, with EU-based firms passporting into the UK. I call this LEUXIT (pronounced lose it). EU firms will lose their temporary passporting regime (TPR) permissions at the end of the year and unless they have invested in standalone or subsidiary firms in the UK, they can no longer provide a continuation of service to UK clients.
“Abbey Wealth has both UK and EU operations and welcomes discussions with firms who would otherwise have to orphan their clients,” France adds.
Abbey Wealth has two Irish companies, both headquartered out of Dublin in Fitzwilliam Square and have been set out there since 2015. The company has an insurance mediation licence and in 2019 a MiFID licence as well, both direct.
“We have two businesses, one that does insurance mediation for clients where they need insurance and the other one does investment advice. And both of those firms are directly regulated by the Central Bank of Ireland,” France says.
So having selected Ireland as a headquarters, prior to the Brexit election – possibly expecting a different outcome than ‘leave’ – why was Dublin the choice of place to set up the business in 2015?
“I decided to set this up in Ireland [after] we had a look at quite a few different member states,” says France. Passporting was really important for us, but we also wanted to make sure that right in the heart of our offering, our clients are protected. If you’re an expat and you’re an English-speaking expat, then there are very few member states in Europe where your regulator is going to be speaking English.
“And Ireland’s really good if you’re an English speaking person and you have an English background, or an Irish background having a country that’s based around British law and has the same sort of protections as the UK, ie, we’ve got an ombudsman here.
“We’ve [also] got an investor compensation scheme. So if a company fails there are levels of protection for that this is a really strong framework for customers. And I think that has to be at the heart of the proposition for financial advice.”
The Brexit referendum took place on 23 June 2016 and with Abbey Wealth beginning to thrive, the company was in the right place at the right time, something that France admits was “a bit of luck.”, especially given that the result meant that many other businesses would now need to find a different solution when doing business within the EU.
Questionable UK advice for expats
“We anticipate as much as £39bn of expat wealth remains under the advice of UK advisers, stagnating in dated or ineffective UK solutions, with no protections for the advice given.
“UK-based advisers are unlikely to fully consider the particular client circumstances, let alone be in a position to respond to them. Reverse solicitation – advising clients solely when visiting UK – is not a legitimate model going forward after European Securities and Markets Authority (ESMA) issued a public statement threatening administrative or criminal proceedings, citing the ‘questionable practices’ around reverse solicitation with firms appearing ‘to be trying to circumvent Mifid II requirements’.”
As individual jurisdictions start to show their regulatory teeth, options for UK based advisers to devise and recommend solutions for expats is limited.
Even historic wealth planning recommendations may no longer be effective as from ISAs to pensions, tax efficiencies no longer apply to expats. Abbey Wealth has both UK and EU operations and welcomes discussions with firms who would otherwise have to orphan their clients,” France adds.
So what advantages does being in Dublin bring to a cross-border advice company? And why are there not more doing this?
“It’s very straightforward recruiting high quality qualified advisors here in Ireland,” France added. “The regulatory framework is very strong. So you can look at your business and make investments for the long term into your business because you know that that the regulator has given great thought to how they want markets to work.
“And then Ireland is part of the EU member states so we can passport from here into every other member state and we have to go through a process but we can open branches in other member states so we’ve got a branch of our insurance mediation directive company in Spain, and we’re working through opening a branch of our Mifid company too so you can set up in other countries dealing with one regulator rather than having to deal with different regulations in different countries. And [also] single currency. People can travel easily around to different places visiting clients.”
Despite the good fortune of the Brexit result, Dublin would still be an important base for Abbey Wealth, France concludes.
“It’s a really excellent place to be based,” he says. It’s one of Europe’s major financial services centres. And that means you’ve got a pool of talent here. That means recruiting it’s expensive to recruit people in Ireland because there’s wage inflation because it’s such a good place.
“But you get really high quality super high quality advisors, compliance people, risk people everything you need to run a really top drawer financial advice business.”