“Fewer, Bigger Firms”: Regulation Will Drive Industry Consolidation, Says H&P CEO

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Speaking to IMI in Davos last month, newly appointed CEO of Henley & Partners, Jürg Steffen, said he was optimistic about the industry’s future growth but that increased regulation would bring about an environment in which smaller firms will struggle to survive.

To watch the interview, click the embedded YouTube video above or below.

Steffen noted that he viewed the advent of industry regulation as inevitable which, in turn, would lead to industry consolidation as smaller firms would struggle to afford the cost of compliance.

“What will probably change in the future is that we will not have as many very small companies because there will be, probably, regulation in the industry. And when you have regulation, of course, you need compliance officers, you need structures and processes in place and, therefore, the company size has to grow,” said Steffen.

Large industry incumbents advocating for industry regulations with which their smaller competitors will struggle to comply has precedent from a wide variety of industries, an example of which, Steffen pointed out, is the banking industry, in which he has a background.

“It’s the same as what the finance industry went through 30 years ago when you had a lot of very small asset managers. Today it’s just not possible anymore, with all the regulations worldwide, for a small asset manager to survive. […] We will see the same; there will be fewer firms in our industry, but bigger firms.”

“Talking to 50 different governments”

Explaining why the firm recently decided to invest in an expansion of its Executive Committee – particularly the strengthening of its government advisory capacity with the hiring of Peter Vincent, a prominent senior advisor to governments with a background in national security – Steffen indicated the burgeoning interest in investment migration programs among states had led to a bottleneck situation.

“Currently we are talking to 50 different governments regarding existing or new programs and, of course, that’s exciting but you need to have the structures and processes in place for this growth,” commented Steffen, politely declining to comment on which governments, in particular, he’d been speaking to.

Read also: Europe’s Golden Visa Boom: From 3 to 23 Programs in 10 Years

“Frequently in Brussels”

Asked for his view on how the industry could better engage the European Commission and other supranational governing bodies in closer discourse, especially in light of the EC’s recent, flawed, report on investment migration in Europe, the CEO remarked that a dialogue was already ongoing.

“We are frequently in Brussels, meeting with different departments, and what’s important is that, when you read through the report, you can see what is right and what is wrong. Unfortunately the EU [the Commission] were not in dialogue with us, and not with the industry. For example, they didn’t talk with the IMC, and you can see that when you read through the report; unfortunately, some things are not factual,” Steffen pointed out.

Read also: Engaging Brussels: IMC Partakes in Euro-Parliament Debate, Meets With MEPs and Eur. Commission

Pacific states considering citizenship by investment programs

Steffen nonetheless expressed optimism regarding the industry’s future, predicting a continuation of the last decade’s rapid proliferation of programs and demand for investment migration services.

“Of course, there will be more and more programs. […] Currently, I think at least 50% of countries around the world have some sort of program,” he said, revealing also that he knew many governments who wanted to introduce citizenship by investment schemes. “In the Pacific Ocean, countries are looking into introducing citizenship by investment programs”.

Read also: 33 Countries That Could Open a Citizenship by Investment Program