The service, ‘Equiniti Wealth Solutions’, will be the first of its kind. It is being designed to reduce the cost of processing for wealth managers and stockbrokers and is a response to growing regulation and the requirement for a commoditised and robust back office which isn’t prohibitively expensive and is fully compliant.
Equiniti is working in consultation with potential users and also calling on new users to help define the service requirements in order to develop a universal solution suitable for the whole industry.
Mark Taylor, Managing Director, Equiniti Investment Services, highlights: “The wealth and broking space is facing unprecedented pressures which current back office solutions will be challenged to address. Equiniti Wealth Solutions provides an opportunity to outsource a number of non-core functions and allows brokers to focus on managing and advising clients which is where their value lies. As one of the UK’s leading registrars with 20m holdings we have experience in processing significant volumes of transactions, and in terms of financial services outsourcing, we are already fulfilling this role within the retail environment and have systems and processes which deliver cost reductions whilst being waterproof from a regulatory perspective. Our existing processes provide outsourced custody, settlement for stocks, funds and fixed interest securities and we are working with brokers and wealth managers to use this to develop a universal platform that capitalises on the existing technology and satisfies their unique requirements.”
The new service also provides an investor interface which utilises the resources of recent purchase peterevans. Equiniti Wealth Solutions will:
- Recognise the cost imperatives for wealth managers and retail brokers
- Allow retention of in-house systems for portfolio management and executing orders with the market
- Include a simple CREST interface
- Provide enquiry facilities for brokers and their clients
- Process corporate actions
- Provide a high level of MI and reporting.
The Broker Benefits
- Delivers efficiencies
- As custody reconciliations and circularisations will be carried out by Equiniti, the associated compliance costs, typically significant, will be reduced
- Wealth managers and brokers will benefit financially from economies of scale as brokers increasingly take up the outsourcing solution with a trusted provider.
Improved client relationships:
- Wealth managers and brokers can concentrate on their core business of managing and advising clients, and executing transactions
- Wealth managers and brokers will gain access to the kind of custodial support which was previously cost-prohibitive via an institutional custodian. It also alleviates concern about certain broking entities combining market-facing risks and holding client assets.
Improved business operations:
- The outsourcing offer will provide an opportunity for larger brokers with multiple systems to simplify their operations
- Through using a standard CREST Sponsored Membership interface, brokers will automatically conform to industry standards.
Lower regulatory burden:
- The outsourcing offer will support brokers in managing the impact of upcoming regulatory changes, with Equiniti taking responsibility for reporting and associated processes.
- EU Securities Law Directive which will almost certainly cover equities within a few years; the implications being that brokers will have to provide corporate information to clients, as well as record and act upon client preferences on voting.