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Charles Owen, CoInvestor’s founder, was invited to appear on Bloomberg TV in June 2018, to speak with Nejra Cehic on the show, Rules and Returns.
We have abbreviated the transcript of the full Interview below, or watch the full interview here.
Q: Historically alternative assets are opaque and paper-based, slow to digitise, on top of that large amounts of data has been stored. Is GDPR a nightmare?
Charles: The short answer is no. To put that into perspective, we are a technology business. We work with lots of financial advisory and wealth management firms helping them digitise their business models so that they can allocate their client funds to fund managers. Most all of them being regulated firms, they were already very aware of GDPR and knew what they needed to do. The challenge is making sure that the data sharing contracts have been updated. We work very closely with all our clients to make sure they have permission to share data.
Q: I’m wondering about the complexity of compliance. Has that been an issue and if so how have you got around it?
Charles: You referred in your introduction to an alternative asset fund manager needing to have a lot of sensitive data to judge suitability, and how they've previously captured that on a twenty, thirty-page application form, which includes things such as – not only who the client is, who’s investing – but actually what their net investable assets are, whether they’re suitable in what financial services terms a high-risk asset. That, historically on paper has been sitting in a filing cabinet. But if you think about how GDPR impacts the individual, the firm has to be able to tell that individual at any time what data they hold. If you are a fund manager or wealth manager and you are holding lots of information over multiple historic years of that nature, you need to move on.
Q: Does that mean firms are adapting to technology though and taking on more technology?
Charles: Very much so. A perfect example of that would be technology enabling information to be available at the point it’s needed, and then removed thereafter rather than just sitting around on a piece of paper.
Q: You also pointed earlier to the fact that what is unique about GDPR in a way is that you need this explicit consent from individuals. What challenges does that pose for the industry that you work in? For example, high net worth clients and financial advisers?
Charles: Very specifically, the high net worth clients of our advisers already have a contract with their advisory firms that that data can be shared. We've seen a few examples which I would consider to be slightly overzealous in interpretation, where a fund manager may have received advice in a very deliberate interpretation of the rules which says that they are not sure they can provide, for example, valuation data back to the adviser on behalf of the client unless the client has specifically told the fund manager they can do so. And that points to, perhaps the contract when that client first invested which might have been 3 or 4 years ago and being slightly out of date. The way to change that is to update contracts and to make sure that you're not collecting data you don't need, and you're very clear on what you are getting and when and why.
Q: What’s been the cumulative impact so far of MiFID II AIFMD and GDPR?
Charles: The cumulative impact is effectively institutionalising what has historically been somewhat an opaque asset class. For example, the requirement within MiFID II to be much more specific on the fee structures and how that’s reported, the requirement for a manager to provide a key information document, this is something that they didn’t have to do before MiFID II and it brings them more into line with financial services more generally.