Wealth Management
FCA Authorisation
Specialist regulatory support for wealth managers, investment advisers, and discretionary fund managers serving high-net-worth individuals and institutional clients.
Wealth Management Regulatory Landscape
The wealth management sector encompasses investment advisory, discretionary portfolio management, and dealing services for affluent individuals, families, and institutional investors.
FCA regulation of wealth managers has intensified following implementation of MiFID II, with heightened focus on suitability, client categorization, costs and charges disclosure, and governance arrangements.
Successfully navigating the authorisation process requires demonstrating robust investment processes, comprehensive risk management, and client-focused governance structures that meet the FCA's high standards.
Typical Services
- Discretionary portfolio management (DPM)
- Investment advisory services
- Execution-only dealing services
- Pension transfer and consolidation advice
- Estate and succession planning
- Tax-efficient investment planning
How We Support Wealth Managers
- Business model scoping and permissions mapping
- Capital and resource planning
- Senior Manager identification and recruitment support
- Systems and platform selection guidance
- Investment process design
- CASS framework implementation
- Complete Connect application submission
- Investment management agreement drafting
- Suitability and appropriateness frameworks
- Risk management and governance documentation
- Compliance manual and procedures
- Financial projections and capital adequacy
- FCA query management and responses
- Senior Manager interview preparation
- Additional information requests
- Conditional approval requirements
- Post-authorisation compliance support
- Ongoing regulatory advisory
Required FCA Permissions
Wealth management firms typically require multiple permissions depending on their service model.
Advising on Investments
Providing personal recommendations on buying, selling, or holding investment products tailored to client circumstances.
- Qualified advisers
- Suitability assessment
- Client categorization
- Product due diligence
Managing Investments
Discretionary management of client portfolios with authority to make investment decisions without prior client approval.
- Investment management agreements
- Risk profiling
- Best execution
- Portfolio reporting
Dealing in Investments
Buying and selling securities as principal or agent, including execution-only services.
- Trading systems
- Best execution policy
- Client money protection
- Transaction reporting
Arranging Deals in Investments
Facilitating transactions between clients and product providers or investment platforms.
- Platform due diligence
- Execution venues
- Order handling
- Inducements policy
Safeguarding and Administration
Holding or controlling client money and assets, subject to CASS rules.
- CASS framework
- Client money segregation
- Asset reconciliations
- CASS oversight
Operating an Organised Trading Facility (OTF)
Running a multilateral system for executing client orders in bonds, derivatives, or emission allowances.
- Trading platform infrastructure
- Pre and post-trade transparency
- Market abuse systems
- Transaction reporting
Permissions & scope
Which regulated activities the firm will carry on, and the exact permissions that follow from them. Everything downstream is scoped to this, so a permission asked for loosely is a business plan and a set of controls built against the wrong thing.
Business model
What the firm does, who for, and how it earns. The FCA tests whether the model is viable and whether the permissions being requested actually match it, rather than reading the two documents separately.
Governance & SM&CR
Who is accountable for what, and whether they are fit and proper for it. Senior manager responsibilities have to be mapped to named people and evidenced, not asserted in a paragraph.
Policies & controls
The procedures that make the model work in practice, and evidence they are followed rather than filed. A policy the firm cannot show operating is the most common gap at the gateway.
Financial resources
Capital, projections and an orderly wind-down. The figures have to agree with the business model rather than sit beside it, and the wind-down plan has to be costed.
Key Regulatory Requirements
Wealth managers must demonstrate compliance with comprehensive regulatory frameworks.
MiFID II Compliance
- Client categorization (retail, professional, eligible counterparty)
- Product governance and target market identification
- Costs and charges disclosure (ex-ante and ex-post)
- Best execution policy and monitoring
- Inducements and charging structures
- Appropriateness and suitability assessments
- Client reporting requirements
Client Assets (CASS) Requirements
- Segregated client money accounts with approved banks
- Daily client money reconciliations
- Safe custody of client investments
- Client asset records and reconciliations
- CASS operational oversight function (SMF16)
- Client money and asset return (CMAR) reporting
- Client money acknowledgement letters
Suitability and Client Assessment
- Know Your Client (KYC) procedures
- Risk profiling and capacity for loss assessment
- Investment objectives and constraints documentation
- Suitability reports for advised transactions
- Ongoing suitability reviews
- Vulnerable client identification and support
Senior Managers & Certification Regime
- SMF3 (Executive Director) for investment management
- SMF16 (Compliance Oversight)
- SMF17 (Money Laundering Reporting Officer)
- Statements of Responsibilities for all SMFs
- Management Responsibilities Map
- Certification of client-facing advisers
- Fit and proper assessments
Governance and Oversight
- Board composition and independence requirements
- Risk committee and investment committee structures
- Three lines of defence model
- Internal audit function (for larger firms)
- Remuneration policies aligned with risk
- Conflicts of interest management
- Outsourcing governance and due diligence
Financial Resources
- Base capital requirement: £125,000 (managing investments)
- Professional Indemnity Insurance: minimum £1.6m per claim
- Own funds calculation and monitoring
- Wind-down planning and analysis
- Financial projections for 3 years
- Monthly management accounts
Common Authorisation Challenges
Issues we frequently help wealth management firms navigate during the FCA application process.
CASS Complexity
Implementing client money and asset safeguarding rules is often the most technically challenging aspect. We provide fully documented CASS frameworks, reconciliation templates, and operational procedures.
Demonstrating Experience
The FCA expects robust experience in investment management. We help you showcase relevant experience, build credible investment teams, and structure governance appropriately.
Capital Requirements
Meeting and maintaining adequate capital can be challenging for smaller firms. We model capital requirements, structure capital efficiently, and demonstrate sustainability.
Systems and Controls
The FCA expects robust investment management systems, risk monitoring, and compliance technology. We help select appropriate platforms and document system effectiveness.
Suitability Framework
Building comprehensive suitability processes covering risk profiling, product selection, and ongoing reviews. We provide complete suitability frameworks aligned with FCA expectations.
Product Governance
MiFID II product governance requirements around target markets, distribution strategies, and product reviews. We implement governance frameworks that satisfy regulatory standards.
Frequently Asked Questions
How do you handle CASS complexity for wealth managers?
Implementing client money and asset safeguarding rules is often the most technically challenging aspect. We provide fully documented CASS frameworks, reconciliation templates, and operational procedures.
How do you help demonstrate investment management experience to the FCA?
The FCA expects robust experience in investment management. We help you showcase relevant experience, build credible investment teams, and structure governance appropriately.
How do wealth managers meet FCA capital requirements?
Meeting and maintaining adequate capital can be challenging for smaller firms. We model capital requirements, structure capital efficiently, and demonstrate sustainability.
What systems and controls do wealth managers need for FCA authorisation?
The FCA expects robust investment management systems, risk monitoring, and compliance technology. We help select appropriate platforms and document system effectiveness.
How do you build a suitability framework for FCA authorisation?
Building comprehensive suitability processes covering risk profiling, product selection, and ongoing reviews. We provide complete suitability frameworks aligned with FCA expectations.
What are the MiFID II product governance requirements?
MiFID II product governance requirements around target markets, distribution strategies, and product reviews. We implement governance frameworks that satisfy regulatory standards.
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Learn more →Ready to Get Authorised?
Speak with our wealth management regulatory specialists to discuss your FCA authorisation.
Phone: 0330 133 0811
Email: contact@memaconsultants.com