“Be cautious, but be as flexible as you can”, warned a panellist when asked how financial institutions should prepare for the UK leaving the EU at this year’s Guernsey Fund Forum.
The panellist said that an asset manager’s biggest issue with Brexit is the uncertainty surrounding it.
Discussions surrounding Brexit, the EU and US President Trump’s de-regulation of the Dodd-Frank regulation (also known as the Volcker Rule) featured heavily at this year’s conference.
A speaker said: “[An asset manager] can manage risk within the corporate sector, but we are being confronted with chaos on the political front, which could lead to a ‘wait and see attitude’ which could later lead to a significant drag on the economy.”
He added that the two-year negotiation period between the UK government and the EU concerning Brexit “needs to be used well”.
When asked to raise their hands and vote, no audience members thought Brexit was doing “reasonably well”.
The panel agreed that the biggest issues to do with asset management and asset servicing are the uncertainties of cost, staff, and the issue of the industry’s access to market routes.
They also agreed that the key to tackling these issues was to create and innovate, especially in terms of technological advancement and artificial intelligence. One panellist said this is largely easier for bigger firms that are in a better place financially.
However, another panellist, commented that despite the concerns, the “industry is used to change and uncertainty”.
She also noted that “some managers have very detailed plans about all potential outcomes”, which she explained involves improving asset servicing and operational models.
In terms of location change, one panellist said there may be a mass movement toward Paris. He warned that movement away from London “could break down the fabric of the city of London” and questioned what would be the financial value of the city of London in the future. He stated “Paris and Frankfurt would be delighted to steal our thunder”.
The panel also discussed the possible “Atlantic rift” that could come in the next few years between the Trump administration and the UK government.
One panellist, an asset manager based in Switzerland, said his firm is set to move a lot of its business away from the US toward Asia following the changes in regulation within the US financial sector since the start of the Trump administration in 2017.
He said: “At the moment, the US has an inward looking market. [The US and Trump] doesn’t care about consequences within Europe. It wants to strike deals.”
He added: “Dodd-Frank is being gradually buried by this Trump’s administration— that’s something we [the rest of the financial sector] should not underestimate. And we should not underestimate the current level of de-regulation in the US.”
