Behavioural pitfalls

Without institutional structure and governance, behaviour drives decision making. The absence of a clearly defined strategy and the discipline to stick to it can lead to poor timing and subpar outcomes.

Long term success also relies on the continued commitment of those leading the family’s wealth. Younger family members may not always be aligned or even interested in taking on the responsibility of managing wealth long-term.

A better way

For most wealthy families there is a better way forward than building your own family office.

At Isio, families and individuals benefit from the same high-quality investment solutions, expertise and economies of scale enjoyed by our institutional clients.

We act as the family’s investment office – a ‘drag and drop’ team drawing on an institutional investment engine built over 25-years within KPMG and Deloitte.

We work with families to define what ‘good’ looks like for their long-term wealth, providing a clear framework that guides decisions with purpose rather than instinct or convenience. By helping families navigate complexity with structure and clarity, we support more consistent long-term outcomes.

1) Mr Family Office, The Brutal Cost of Running a Family Office

2) Top 10 Private Banks, Compare leading private banks and their services in UK

Evaluate and prepare

Re-assessing and possibly ending a relationship with a long-term advisor can feel daunting… but it doesn’t have to be disruptive. Start by:

• Understanding how the market has changed – It might have been a long time since you took a deep dive on what’s out there.  Not only are there new types of provider but also new approaches to achieving risk adjusted returns and aligning with your mission.
• Refresh your investment policy – Over time it’s possible for an IP to evolve to resemble the product you are invested in.  That means you have imported your manager’s policy rather than working out what your organisation truly needs to be successful.
• Understand what may be holding you back – Sometimes lack of investment confidence or past experience of a difficult transition can create internal barriers to change.  It does not have to be that way!
• Get started now – Things are unlikely to deteriorate sharply in the immediate aftermath of a takeover… but if you put the building blocks in place you will be primed and ready if you do encounter trouble ahead.Preparation ensures continuity and protects your portfolio.

Preparation ensures continuity and protects your portfolio.

Seek true specialists

In times of transition, the distinction between generalists and specialists matters more than ever.

A true investment specialist will:

• Construct and manage portfolios aligned with your evolving needs
• Offer independent advice free from institutional bias
• Provide access to sophisticated strategies and deep expertise

This kind of partnership is essential in a world where managing investments is increasingly complex.

Final thought

When your asset manager changes hands, don’t let inertia or prestige keep you tethered.

Ask whether the new institution is still delivering bespoke advice and excellent value. If not, it may be time to look around.

The regulatory outlook for 2026

Consumer Duty

Although the consumer duty has been in place for over two years, the FCA remains focussed on ensuring that all firms fully embed the duty into their culture. While they acknowledge progress, the FCA will continue to focus on outcomes monitoring, fair value and consumer understanding, and how the requirements are met through the distribution chain. Firms’ approach to vulnerable customers is also likely to remain a key concern of the FCA. We consider it likely that the FCA will undertake further supervisory work on consumer duty embedding through individual firm engagement and multi-firm projects or thematic reviews.

Simplifying Investment Advice Rules

With the consumer duty now regarded as the key regulatory standard for delivering good consumer outcomes, and with the commitment to reduce the regulatory burden on firms, the FCA is planning to simplify and consolidate their investment advice rules and guidance. Changes include creating a clearer distinction between simplified and holistic advice and re-assessing the rules for ongoing advice services. This could provide greater flexibility for firms to provide services in different ways than has been permitted to date, leading to potential changes in advice processes and business models.  A Consultation Paper is expected in Q1 2026, with final rules in place by Q4 2026.

Targeted support

Delivery of targeted support for retail investments will be a top priority for the FCA in 2026. Designed to fill part of the ‘advice gap’ by enabling firms to provide a service for mass market non-advised customers, where suggestions for retail investments can be made for consumers in different segments, without having to comply with the full suitability rules for regulated advice. Near final rules were published in December 2025 and the authorisations gateway for firms looking to provide this service will run from January to March 2026, with the regime starting from April 2026.

Expanding Consumer Access to Investments

Aside from targeted support and the development of a new simplified advice regime, the FCA will continue to review the retail investment sector to consider barriers to investment and the risks associated with certain products and services. A discussion paper was published in December 2025, looking at how changes could be made to the regulatory framework for retail investments to help the market grow.  This covered: supporting innovation; a consistent regulatory framework for similar products (e.g. MPS and investment funds); access to high risk investments; and aiding consumer decision making with ‘positive frictions’.  In 2026 there will be further engagement with stakeholders on the risks to retail consumers across distribution methods, products and services where regulation may be misaligned with consumer risks. The FCA will also re-assess the regulatory tools it uses to mitigate risk and support growth in the sector.

Modernising the redress framework

Following consultation in 2025 on updating the redress framework, FCA is planning to issue new guidance on identifying harm and on conducting firm-led redress exercises in the first half of 2026. Alongside this, the Treasury is expected to confirm the outcome of its consultation which could see the introduction of a 10 year longstop for complaints to be raised with FOS, a framework for referral of issues with wider implications from FOS to FCA, and new tools for the FCA to better manage mass redress events.

Senior Managers and Certification Regime review

The Treasury, PRA and FCA intend to streamline the SMCR to reduce the burden on firms by 50%. The FCA consulted on changes to its rules and guidance in 2025 and expects to implement changes by mid-2026. This first stage of reform is expected to be followed by further changes which require legislation. The first phase could include: greater flexibility in providing temporary cover for senior manager posts, simplifying the approvals process, streamlined reporting requirements, more time to submit information, reducing the number of firms required to comply with the enhanced level, and providing more guidance.

Review of client categorisation and conflict of interest rules

The FCA issued a consultation paper in December 2025 with proposals on changing the rules on client categorisation and conflicts of interests, and it is expected that this will lead to changes in policy by mid-2026.

Client categorisation:

The FCA plan to improve the framework so that clients with appropriate experience and resources can opt out of retail client protections more easily, while ensuring that the genuine retail clients remain protected. It is proposed that wealthy individuals with more than £10M will be able to become elective professional clients (EPC) with no tests required. For those with fewer assets the EPC quantitative test will be dropped and the qualitative test enhanced. The FCA remains concerned that firms have allowed clients to self-certify that they meet the requirements and they are proposing that firms cannot solely rely on clients assertions, and they must obtain the information required for the qualitative test.

Conflicts of interest:

The FCA proposes to simplify the conflicts of interest rules by removing duplicative requirements in SYSC 10 where very similar provisions are worded differently for different activities, and consolidating the several different EU directive derived terminologies into a single terminology for all types of business.  This is intended to make the rules simpler, without changing the core obligations.

The contact details for our Regulatory Risk and Rectification team are listed below. We would be delighted to discuss the regulatory outlook for 2026 and any wider regulatory conduct, risk and remediation matters of interest to your firm.

FCA consolidator review

The FCA is explicit that it is not setting out anything new and that its recent publication is a reminder of existing expectations. For some firms this means that no action is required, with the outcome of the review serving to provide comfort in their own practices. For others it will serve as a warning and the industry will be watching to see the next steps from the FCA where firms have not heeded this warning.

As expected, a common theme throughout is the proactive monitoring and management of risk with firms demonstrating clarity in their governance and a commitment to the Consumer Duty.

Where areas for improvement have been highlighted it’s not clear whether individual firms displayed only one or multiple of these oversights, or across how many firms these behaviours were observed. It’s also not clear the severity of some of the poor practice observed.

This suggests that the FCA does not view any oversights as a systemic cause for concern. Given the FCA’s re-iteration that it is not introducing anything new, this suggests that for now a gentle reminder of its expectations should be enough to bring consolidators into line. However, the question stands – what will the FCA’s next steps be if there are no improvements?

The review focussed on a number of key areas:

Group debt management

The FCA are rightly concerned about debt guaranteed by other entities in the group which may lead to a weakening of the resilience of the firms. Firms demonstrating good practice had robust group debt management procedures, with early warning indicators flagged at board level.

Group risk management

One of the underlying principles of good risk management is that a holistic approach is taken. This includes looking at the group as a whole rather than isolated business units. Where groups neglected to consider group risk, firms did not consider how inter-connected entities within the group are, and risks that may impact upon multiple entities (e.g. shared services/revenue streams).

Group structure and approach to consolidation

Complexities can arise where offshore holding companies or dual-parent structures are used. This can limit regulatory visibility over the group as a whole.

Acquisition and integration approach

Given our significant experience in acquisition support, we understand the importance of good due diligence and agree with the FCA that this is something that should not be viewed as a “tick box” exercise. One of the main risks arising is firms rushing into acquisitions to keep pace with rapid growth. As a result, some firms were finding themselves needing substantial further investment, thereby stressing the importance of defining a clear acquisition strategy.

Governance and resourcing

It’s clear from the review outcomes that Consumer Duty is at the heart of the FCA’s message. It’s no surprise that clear, strong governance is being highlighted as evidence of best practice. Whilst there is no indication of a discouragement of the rapid growth of consolidator firms; there is caution that firms must ensure that their governance framework keeps pace with this growth.

Conflicts management

Some firms provided explicit or implicit incentives for advisers to steer clients to group products. As with the other areas for improvement it’s not clear from the review the level or prevalence of this behaviour and it may be a result of complicated group structures and quick expansion. Whether implemented knowingly or not is left to speculation, but the FCA reminds firms of the Principles for Business and rules on inducements.

It’s evident from the outcome of this review that whilst the FCA believes current expectations are sufficient, they are only effective if everyone plays their part. At present, they don’t believe that all firms are following best practice with some leaving aspects of good governance as a secondary thought. It may be a symptom of the rapid growth seen in recent years, but the FCA is unlikely to be forgiving if there is no evidence of an improved attempt to meet these standards where firms are lacking.

Ongoing IFA advice

Background

Earlier this year the FCA published the outcome of a review of the delivery of ongoing advice in recent years. We were pleased to see such a high positive rate of ongoing advice delivery (c.80% of cases). The results were encouraging and provided comfort that the industry continues to act in the best interest of clients.

Positive response

The findings from the FCA were broadly positive with the majority of firms appearing to demonstrate compliance. There is obvious concern surrounding the 2% where advisors had made no attempt to engage in a suitability review, however it is the grey area created by the 15% where clients had not engaged with advisers which is of more interest. In the majority of these cases, it is likely that firms will have attempted to engage with clients but they may face more scrutiny in the near future should they be asked to provide evidence of good practice.

There were a few key themes running through what the FCA viewed as positive behaviours, namely:

The survey included 22 of the largest firms which will likely be in a better position to have such good practices in place and the findings may not be representative of the industry as a whole. Smaller firms may not have the same resources at their disposal to maintain the same level of record keeping and many will have started a drive to review processes and policies.

Looking back to move forward

Evidence is key here. The FCA are expecting firms to be able to assess and provide evidence dating back to January 2018 that services have been carried out in line with contractual agreements. This includes maintaining clear documentation evidencing regulatory standard advice meetings have been conducted. There are a number of actions firms will be considering in response to this:

• Review evidence of workings over the past few years.
• Identify clients who may have suffered foreseeable harm as a result of acts or omissions by the firm
• Pay redress either in full or partially in respect of charges levied.

What we do

Having worked closely with the FCA for a number of years, Isio are supporting firms with reviewing current ongoing advice practices and controls alongside Consumer Duty implementation in this area. We are able to help firms assess back book risk; establish the scale and impact of any issues; and identify and evaluate alternative strategies for managing risks.

Case Study

Following the publication of the FCA review in February 2025, our client developed a policy setting out principles for evaluating missed annual reviews between 2018-2023 and refund decisions for affected clients.

Isio was engaged to review the policy documents and set out our observations and comments, giving consideration to the FCA’s expectations. While the documents aimed to demonstrate proactive remediation, we highlighted that the structure risked prompting regulatory queries if shared in the current format.

We provided the client with potential approaches to address this prior to sharing with the FCA. This engagement highlights Isio’s expertise in balancing remediation objectives with regulatory compliance.

What’s next for ongoing advice?

As 2025 begins to wind down, we expect to see a number of developments going into the new year. We’re beginning to see many firms set aside capital in response to the FCA’s review which suggests that despite the positive outcomes of the review there is still room for improvement in the delivery of ongoing advice.

This year has seen the FCA take action as it continues to engage with firms on their current processes, and we expect that to continue into 2026. Next year will also see the FCA launch a consultation on their proposed rule changes which should give firms further opportunity to re-consider their forward-looking approach to ongoing services. As the changes come into play, Isio can support firms in interpreting the new rules and advise on any changes to practices which could be considered.

Recognising the red flags 

Despite the difficulties of evaluating your private bank relationship, there are clear red flags to look out for. The most significant is when you ask for your strategy or portfolio to be adapted to a specific objective and that request is met with hesitation, or declined altogether. You are paying for bespoke wealth management and any friction suggests you are receiving a service that is standardised rather than tailored.  

You should also be able to identify an all-in cost of service. Where this is obscured, it is a sign that your interests may not be fully aligned with those of your private bank. Equally important is understanding the nature of the advice itself. Too often, investment recommendations are shaped less by client objectives than by what the bank is best positioned to sell. When recommendations resemble a bank’s historic strengths and pushy to the point of feeling sales-oriented, rather than based on impartial advice, it is a clear sign that the relationship is no longer serving your needs.  

Dealing with the same people matters. High turnover of senior bankers, who are being replaced by less experienced staff, is another warning sign that quality of service could be set to deteriorate. This can reduce the quality of your engagement to a transactional, rather than deeply personal, relationship.  

Investment performance is more complex to assess and if markets are benign you may feel less inclined to scrutinise returns. Private banks often benchmark your portfolio performance against broad industry averages, but comparisons should show your portfolio relative to a portfolio with similar objectives. If you have a long-term growth objective, ask for performance to be compared to one of the world’s leading pension funds or endowments. Don’t settle for mediocrity disguised as competence.  

Finally, don’t get sucked in by glossy reports and curated events. They can create the impression of sophistication, fuelling the inertia which makes severing a private bank relationship more difficult. The essential question you need to ask yourself is whether your bank is providing genuinely bespoke advice and excellent value.  

Knowing when it’s time to look around 

When doubts accumulate, ending the relationship can appear daunting, but there are simple steps you can take to make looking around for a new partner straightforward. The first step is an audit assessing whether fees, performance and service have met the commitments your bank originally made. The next is to evaluate what you are getting against other providers and not just banks, but genuine investment specialists.  

When making a change, preparation is crucial. Understand exit terms, transfer processes and potential tax considerations. This will help you switch in a way which minimises disruption and ensuring continuity for your portfolio.  

Trust in an investment specialist 

Just as in other professional fields, there is a distinction between generalists and specialists. You likely wouldn’t want your GP performing brain surgery. Wealth is no different. Private banks can provide high quality banking services but for managing wealth and investments, a specialist will have genuine expertise in constructing and managing portfolios and adapting strategies to your evolving needs.     

Wealthy individuals and their families are increasingly turning to investment specialists, or establishing a family office which works in close partnership with them. This arrangement offers control, independence and access to sophisticated knowledge and high-quality solutions in a world where the challenges to successfully managing wealth are growing.  

In an environment where the financial needs of wealthy individuals are increasingly complex but the potential to protect and grow wealth is higher than ever, remaining in a comfortable but unproductive private banking relationship is a significant risk. While potentially daunting, the best decision you take this year might be to break up with your private bank. 

The advice trap 

One problem is that professionals who have sought some help earlier in their careers assume that their wealth continues to be well-managed as they climb the professional ladder. Here’s where our teams tend to encounter two other issues. 

The first is that what suits them as a junior in a firm – with a decent income by society’s standards, but far off what they’ll end up drawing – probably won’t be right as they progress. Part of that is those inflection points. But it’s also important to re-evaluate your objectives as you get older. 

We’ve worked with lots of lawyers who were planning to keep going as a partner until retirement – but then realised in middle-age that perhaps a change of pace or even a move into a different profession felt right after years of hard graft. Those kinds of changes demand a fresh look at wealth planning. 

The second is that time-poor professionals will often call in an expert to handle their financial planning, not realising they’re no longer getting value for money. We recently started working with one partner who’d hired an adviser years ago and assumed the arrangement was fine. But the fee structure was geared to a much smaller portfolio; we were able to save them £14,000 a year simply by applying more appropriate rates as their wealth had grown. 

Getting it right 

There can be more significant risks in letting things slide. With one client, we calculated they’d missed out on £250,000 of overall portfolio value simply because some relatively straightforward steps hadn’t been taken since they last looked at their investments. 

It’s never too late (or too early) to avoid these kinds of situations. It boils down to four steps. 

• Bite the bullet. Carving out even limited time to talk to an impartial, professional adviser is a must. Moving it up the to-do list will actually create time and headspace – or better protect your wealth. 
• Have the conversation. Good advisers don’t have a one-size-fits-all approach. Be open to discussing long-term goals. If that conversation reveals a pathway to better wealth management, only then can we talk portfolios, structures and fees. 
• Understand the approach. Our Big Four heritage means we understand partnerships and professional standards. We know that the plan detail and rationale should be available. The time burden should be off your back; but you can always check the workings. 
• Review the performance. Circumstances and life goals change and the markets are always shifting. Regular, light-touch reviews ensure the approach remains aligned to those goals.  

For Isio, great technology, deep market knowledge and the DNA of senior professionals in our own toolkit makes a huge difference. But establishing a trusted relationship via that conversation is what ensures advice is timely, impactful and frees you up to achieve their broader personal and professional goals. 

The aim is to allow high-performing lawyers to focus on creating personal wealth, not worrying about managing it. A Vanguard client survey this summer found advised investors are roughly half as likely (14%) as self-directed ones (27%) to experience high levels of financial stress; and 76% of advised clients say advice saves them time, rather than just generating additional returns.  

That’s something even the most successful lawyer can’t buy.  

Retirement income advice

FCA’s expectations around retirement income advice are nothing new. Their thematic review was published in 2023 and almost two years on they have published their guide highlighting areas of good, and not so good, practice based on this review. As an area which may not have been high on the priority list for firms, this recent guidance will serve as a reminder that this is very much an area of ongoing focus for the FCA.

Key areas raised by the FCA’s thematic review include:

Arguably many of the areas of good practice identified would appear to be common sense: detailed information gathering; reviews of risk profiling assumptions; and revisiting modelling when a client’s circumstances change. These will be common practice for many. However, the FCA is expecting firms offering retirement income advice to take relevant action following this guidance. Although subjective, firms should at least be able to demonstrate they have considered all the areas identified in the FCA’s guidance as part of their “relevant action“. With a number of firms already receiving individual feedback on where advice has fallen short, this is not the time for complacency and firms can be expected to provide potential redress if on review their advice falls short of the FCA’s standards.

The right tool for the job

Many firms will already be familiar with FCA’s Retirement Income Advice Assessment Tool (“RIAAT”). Introduced to support firms in reviewing advice it will require further development of policies and procedures and documentation of outcomes. Although firms are not required to use the RIAAT, the FCA has been using this to sample files in their review. Therefore, using the RIAAT as part of a self-review could prove valuable in pre-emptively identifying areas for improvement before the FCA gets there first.

Another tool identified in the FCA’s review is cashflow modelling (“CFM”). As with the RIAAT, whilst it is not a requirement for firms to use this, it is a tool that may be useful for some. Firms may turn to CFM to support clients in assessing their future income needs and the FCA identified several areas in their review where CFM in particular helped demonstrate good practice in managing retirement income sustainability. The level of sophistication in these models can vary and any additional complexity will carry additional risk. In other words, simply adopting CFM isn’t enough. Firms need to ensure a good understanding of their modelling processes and be able to justify any underlying assumptions. The FCA’s guidance on CFM published in 2024 continues to be relevant here and firms are encouraged to read this alongside the FCA’s guidance on retirement income advice.