Life companies have retreated and 2018 saw an avalanche of regulation hit the European market – specifically Mifid II, Priips and IDD to name the heaviest hitters.
International Adviser’s latest European regional piece asked advisory firms – is Brexit really the end of the world as we know it for the financial adviser market?
Brexit has caused issues for the continent’s entire adviser market and the world is no clearer about what will happen – but it is not the only problem it faces.
To understand how much of an impact the lack of life products has on the advisory community, IA reached out to several firms to get their views.
Aisa chief executive James Pearcy-Caldwell told IA: “Yes [there is a shortage], if you are discussing life products often exclusively used by expat advisers; however, this is more to do with Brexit and legal actions taking place rather than regulation imposed at this point.
“Some companies continue to allow their products to be marketed in the EU but make it clear that they take no responsibility for ensuring that they meet new regulatory requirements.
“Also, we have seen Lloyds of London cease offering some European insurance as a result of Brexit uncertainty,” the advice firm boss said.
Tailored products
As fewer products enter the market and the EU considers implementing more regulation – the question is whether the need to offer products tailored to regulatory requirements in each individual country is underestimated.
Pearcy-Caldwell said this is an issue in the European life sector: “Some companies that advertise themselves as compliant in certain countries admit that that has not been tested.
“There is confusion between applying for passporting licences for products under regulation, and whether those products actually meet the demands of the tax offices in the various countries.
“You can be regulatory compliant but not tax compliant and the outcome can be the client is the loser.”
The director of advisory firm Blacktower Financial Management, Robert Mancera, said to IA that there are now “extensive” commercial considerations when bringing compliant products to market because of regulation.
He added: “You need ‘volume’ to be able to make it commercially viable.”
New era
Despite issues trying to roll out products, Mancera said: “There is a serious gap with regards to the full suite of protection plans [across Europe]; including standalone critical illness. Also, there is a huge hole in the regular savings arena.
“We need a new era of regular savings solutions – which are more price sensitive and in tune with the cross-border working expatriate.”
Pearcy-Caldwell added that the European life market will “remain strong” for those companies and advisers that use local products in the relevant countries.
“This may not be the same answer for expat advisers operating on the fringe and using products from outside the EEA,” he said.
