How are players in wealth management handling the various dynamics of risk? WHIreland’s Roddy Buchanan and Miles Dean of Milestone International Tax Partners share their opinions with Meghna Mukerjee
Go deeper with GlobalData
The risk management puzzle for wealth management firms is manifold. From cybersecurity to conduct to investment to reputational risks, private banks and wealth managers need to instil a culture of risk management throughout their firms like never before.
Roddy Buchanan, head of wealth management, WHIreland, and Miles Dean, founding partner, Milestone International Tax Partners, answer some questions for PBI, and throw some light on the various dynamics of risk management in the current environment.
Meghna Mukerjee: What are the areas of increasingly growing risks in wealth management?
How well do you really know your competitors?
Access the most comprehensive Company Profiles on the market, powered by GlobalData. Save hours of research. Gain competitive edge.
Thank you!
Your download email will arrive shortly
Not ready to buy yet? Download a free sample
We are confident about the unique quality of our Company Profiles. However, we want you to make the most beneficial decision for your business, so we offer a free sample that you can download by submitting the below form
By GlobalDataRoddy Buchanan: An interesting question given the breadth of risk possibly unique to financial services. First there are the risks associated with investment – none of these are new, but they jockey for position dependent upon underlying markets. Second are the risks associated with doing business – be these financial, regulatory, reputational or competitive. Then there are those that are emerging and growing, such as the onward march of passives from the US, and cyber and data security brought about by the rapid advances in technology.
Miles Dean: Lack of volatility in the markets means there’s less opportunity for significant upsides. Cybersecurity is definitely a risk, as is the risk of whistleblowers. However, one of the most pressing risks the wealth management industry currently faces is European bank stability.
Conduct risk is in focus like never before. What is your firm doing on this front?
RB: It amuses me that when the concept of conduct risk was first introduced many were left wondering what it meant. Fast-forward to today and although there might still be some lingering ambiguity, not only is the de definition clear, so too is the emphasis designed not only to encompass risk to the delivery of fair outcomes for clients, but also market integrity. Given that this impacts upon just about everything we do, it is not new, but what it does for us is provide a regulatory framework to reassess every policy and process, measure that each one is effective and – just as importantly – reinforce the cultural behaviours that underpin them.
MD: In terms of fair customer outcomes, wealth managers need to be whiter than white these days. Absolute transparency in relation to what’s being sold and the inherent risks the client is assuming is paramount.
Data leaks or any misconduct by staff have lasting reputational damages for institutions. How can banks prepare against such threats and breaches?
RB: Having clear policies and procedures and ensuring that these are adhered to. Also having a second line of defence should it occur – such that any damage is contained.
MD: The risks need to be taken more seriously. The ‘it will never happen here’ syndrome does not wash when it comes to cybersecurity. Whistleblowers, on the other hand, can be avoided by ensuring the conduct of the bank, in particular its attitude to offshore money and tax evasion, is irreproachable.
How can organisations ensure that their staff members are aware of security threats, and not giving way to manual breaches?
RB: As the latest ransomware attack highlights – if this uses security exploits similar to those used by the WannaCry ransomware last month – follow any guidance provided by security vendors, make sure that staff install any security updates, and remain extra vigilant with email communications.
MD: It is vital that organisations place due importance on the training and investment of their staff when it comes to security matters, ensuring that the necessary resources are available.
Is your firm investing more in security- related technology systems?
RB: As the threat grows and sophistication increases, added security inevitably comes to the fore.
MD: While there has been increased investment in security-related technology systems, as I have said, this needs to be combined with high-level training and investment in staff, ensuring a widespread awareness of current risks faced by the market within the firm.
