He is the director general of the Association of the Luxembourg Fund Industry, a 35-year-old trade group that said it represents “more than 1,500 Luxembourg-domiciled investment funds” and more than 350 asset management companies and service providers. In recent years, has been known for being softspokenly outspoken on tokenisation technologies and the democratisation of private asset funds. Now he’s got to speak for the entire investment fund ecosystem. He certainly wants to give it a voice and he certainly has something to say.

Europhile

First things first: why did he take up the Alfi post? When introducing himself to stakeholders, “usually I talk a little bit about my background,” Weyland said during an interview with Delano. “My father was a diplomat” in Luxembourg’s foreign service. He had postings in New York, London and was in Brussels for roughly 14 years, where he served as Luxembourg’s representative to the EU. This is the post that outgoing Luxembourg for Finance CEO will take up . Weyland said that “Nicolas and my father worked together when my father was ambassador in Washington. That’s where I first met Nick. I grew up in a very international, very Europhile environment. My father contributed a lot to the building of Europe, because when Luxembourg had the [EU] presidency before the signature of the Maastricht Treaty, he was in Brussels, so obviously was very involved in those discussions.”

After his studies, Weyland started as a management consultant, then worked in asset servicing and for an asset manager. But his father’s career clearly inspired him. “After almost 30 years in the industry, when you have an opportunity to really do something for your country... it was a fairly obvious choice to make.”

Fierce competition

The funds industry represents a significant part of the grand duchy’s economy, and tax base, and Weyland wants to secure the sector’s future growth and in turn the country’s prosperity. That will require what he called “bold steps”.

“The current government is very, very aware of the importance of the financial services industry, I think. But probably now, more than in the past, it is important to take bold steps. Luxembourg doesn’t necessarily have a reputation for taking bold steps. But in these times of change, we’re in fierce competition. A lot of existing or emerging financial centres are willing to get a piece of the cake we have. So we have to continue innovating, we have to be able to sometimes take bold steps. It’s about competitiveness. It is important to start with a government that understands the financial services industry and understands the economic weight of that industry. And the importance for it to continue to develop and understand the risks of seeing other financial centres compete.”

Learning to say ‘no’

What are some of the bold steps he has in mind? Weyland alluded to the grand duchy’s approach in recent years of applying the maximum level of EU financial regulations, a stance adopted to shake off the country’s historic image as a tax haven. “We--and when I say we, it’s the industry, the regulator, the lawmakers in Luxembourg--we should be confident enough in our understanding of the financial ecosystem to have our voice heard at the European level and say to the European Commission and [European Securities and Markets Authority] ‘no, this is not the right way of doing things, you should do it differently.’” On other occasions, Luxembourg’s financial regulator, the CSSF, could “take a different stance from Esma recommendations... provided, of course, risks are managed and I can still justify why I’m doing things a little differently.”

For example, when EU authorities are late publishing technical standards, a somewhat regular occurrence, the CSSF should be given leeway to implement provisional guidelines, “to say, this is how we are going to manage this. Luxem­bourg has been able to show that we have been fairly consistent--we haven’t had any major scandals--from the ­investor protection perspective. And the expertise is there.” While EU regulations often leave room for manoeuvre, the grand duchy typically toes the line. On the other hand, referring to socially responsible investing, “you have countries like France having taken bold steps with respect to impact regimes. Why not do the same? Or even better?”

Luxembourg’s best practices

Better still, national leaders should promote “the things Luxembourg has been doing well for a long time.” For instance, the CSSF’s “circular 02/77 on investment breaches and Nav errors,” referring to net asset valuations, which he called “basic investor protection, really basic.” But many other member states and the EU itself have never implemented comparable standards. “I don’t understand why Luxembourg has had this regime for over 20 years and some of the other very large domiciles across Europe have not had a similar regime, meaning that their regulators were completely blind on investment breaches or Nav errors in retail funds. That means that a pan-European regulator does not do its job properly. I mean, they should have looked at that and said, ‘this is best practice. You other guys, you should do the same.’ That was my understanding of the [point of] peer reviews from Esma, but apparently it never happened, for whatever political reasons.”

Retail-friendly Ucits investment funds are “one of the big export products of Europe to the rest of the world.” If the pan-EU regulator were one day to tighten the rules too far, things could snap. “It would really be sad if Esma would kill the best export success. They have the power to do so if we’re not careful.”

Connecting the dots

Weyland is not entirely critical of policymakers and does not think the burden hangs entirely on them. “Sometimes I think the difficulty is that regulators need to be a little remote from the reality of the business. That’s where we need to work harder to make sure that we always convey the business context for them, [so they can] understand the impact of regulation and laws.” That is something he aims to achieve at Alfi, to help officials and stakeholders across the financial sector “connect the dots”.

At the same time, sometimes regulators get blamed when the industry itself should be more accountable. “Time to market for this industry is absolutely crucial. So how do we make sure we have clear rules and we can launch funds very quickly? I’ll share this little story from one of my previous jobs, where we would have a time to market for a fund launch of typically six months plus.” At the firm and across the sector, “people tended to say, well, you know, it’s the CSSF” that has been slow in responding to authorisation applications. “Then we worked on the process internally, between product teams, between the internal legal advisors, the external legal advisors, in the file preparation, and we were able to reduce that by half. So we ended up, on average, with a three-month turnaround for a product launch. Very often it is not the regulator, it’s actually the way people are organised. We need to make sure that Luxembourg--that’s law firms, service providers, the CSSF--that we deliver, and that we all take responsibility. It cannot be that when a specific person is on vacation, then nothing happens. We’ve all heard the stories.”

“The CSSF has grown a lot over the past few years. They are now, I think, stabilising their size. They’ve been able to organise themselves and have addressed to a large extent these smaller issues” around responsiveness, where the Luxembourg agency often gets unfavourably compared to Ireland’s regulator. “Probably where I can see” room for improvement “is indeed for them to speak up more at the European level and to make their voice heard. And their voice is, partially, also making sure that they understand the industry better across all asset classes, which is a challenge because Luxembourg has such a broad reach. In terms of asset class, you don’t have that in Ireland, [a market] very far from the diversity we have in Luxembourg--very, very far. If you look at the size of the [exchange-traded fund] business alone in Ireland, that’s a really big chunk of their assets. And, you know, it’s plain vanilla stuff. So the complexity we have to deal with here is much higher, which I think we’re lucky to have,” Weyland stated. “But it needs to be said, because you have to compare apples with apples. Very, very often people tend to compare apples with pears, because then they’ll say, ‘well, we got approval in Ireland for this, that and the other, and it was half the time than in Luxembourg. But if you look at it in detail, you notice that it’s very different products. Competition is important, but the devil is in the details.”

Conveying granularity

The challenge for Alfi “is being able to actually dig deep when needed, to go and get the information that our policymakers need to understand what hurts the industry or what needs to be done differently for us and better accommodate the needs of the industry. If I had to summarise one element” that will be key for Alfi moving forward, it would be “understanding the business and being able to convey the granularity in those details, which sometimes are a killer to the industry. And sometimes can drive away business if they’re not addressed properly.”

At the same time, mutual respect and putting yourself in others’ shoes are important, in Weyland’s view. “I’m very keen on engaging with” regulatory staff. “I’ve known the CSSF for a number of years and I’m very conscious of their context. And I think that’s important when working hand in hand with regulators and policymakers: understanding each other’s context. Because we all make mistakes, we all only have a limited perspective on the industry and it’s by working together with them we can have a broader perspective.”

A few days after his interview with Delano, Weyland planned to meet with Esma representatives and he said: “I fully appreciate where they are coming from, but I think sometimes we need to be able to articulate things the way they are, because otherwise we don’t make any progress. I’m very new in the job, so maybe I will have to revise some of my statements in a few weeks’ time, but I like to be a little provocative.” While he is a strong believer in “respecting other people’s work... I have very little tolerance for when things are done for the wrong reasons. Because that is where we need to be very vocal about it. Something I think we try to do, and I always try to do, is [when] things are done for the wrong reasons then it should be said” out loud.

Protectionism

Earlier in the conversation, Weyland discussed competition with rival European financial centres. “First of all, I think competition is sound, it keeps us on our toes. If I look at Ireland, very often we’re in the same boat [and have a] common position vis-à-vis European regulations or protectionist measures, etc. We need allies in that discussion.”

Asked about particular protectionist measures, he replied: “Unfortunately, we see examples of this protectionism come through in the way regulatory frameworks are actually shaped in Europe. A recent example for me is Eltif.” The European Long-Term Investment Fund “regime is a fabulous vehicle to ensure that people other than only institutional investors have access to private markets. Of course, we need to be mindful that it comes with risks, liquidity constraints, etc. But I think there is great value in creating a pan-European regime that will hopefully be able to leverage off the good things that have been happening in the various countries. But it is not a reason to kill this regime because one thinks that there’s local products that should continue. Because the reality is that local products very often only invest in the local markets, they are very small, they are costly for the investor. I think a pan-European product can be much more efficient. That’s an example of where we have seen some protectionism going on.”

Does he mean protectionism from Paris? “Yeah. The French regulator has been very vocal about trying to constrain the Eltif a lot or impose liquidity requirements, which funnily enough, they don’t impose on the local product. Which is quite interesting.”

Taxes and teleworking

And what about bold steps closer to home? Weyland said recruitment and retention efforts need to be stepped up to keep Luxembourg’s funds sector an attractive place to work, and that tax and teleworking policies would be a good place to start. Specifically, “tax breaks” which “could be temporary tax breaks for a few years, or if you had an inpat regime, for all these young talents, why not? I wouldn’t be shocked [for the government] to say, ‘you only get taxed 50% for your first five years, so you can at least afford to live in a flat in Luxembourg.’ Why not? We are fighting for talent and talent is extremely important in this industry, as a service industry.”

In terms of attracting more experienced staff, “it’s a combination of ease of relocating, having decent schooling for kids. There, a lot of initiatives have been taken. The university also is an important topic to continue attracting research and know-how to Luxembourg. And, as I said, the tax component is important to remain competitive. We should not be at a disadvantage vis-à-vis other countries. I think that would be a mistake. I think people that are fairly compensated need to pay their taxes, that seems clear, but we should not be in a situation, or we should not end up in a situation, where we are less competitive than our neighbours. That would be fatal.”

Along with taxes, Weyland said that EU rules on working from home--which despite recent changes is capped for cross-border commuters at 34 working days annually--potentially put Luxembourg at a disadvantage in terms of talent retention and recruitment. “We know that teleworking has been a game-changer, has had the effect of, indeed, becoming more interesting for people commuting to work in their own country by saying, ‘maybe I can instead of working for a Luxembourg law firm, I work for a Paris-based law firm whilst, I don’t know, living in Nancy and I [only] have to be in Paris one or two days a week. I can do that.’ So, yes, continuing to work on the arrangements with neighbouring countries on the double tax treaty side” should be a priority for the government.

Does Weyland have a specific number in mind? “You should, ideally, have between 50 and 100 days of teleworking per year. In those agreements, I think 50 is probably on the lower end. But we’re making progress. And I think one of the best reasons to go down that route is the environment. I stood in traffic this morning, and I thought, ‘well, I definitely need more teleworking’.”

Agenda for Alfi

Alfi plans to publish an ambition paper “by mid-year” spelling out its updated objectives and providing “a detailed action plan with milestones,” Weyland said. “We have four big areas in mind.” The first is being “asset management centric, so to continue really listening to the voice of asset managers and identifying the need for product innovation” and making Luxembourg attractive for those asset classes.

The second is “digitalisation of both the value chain, the distribution, so becoming more efficient, but also reaching out to more investors going forward as an industry. The third quadrant is the sustainability side... making sure that the asset management industry contributes to building a more sustainable world. Of course, it’s a journey, it’s a lot about engagement, about transition, rather than trying to be all green from day one. That doesn’t work. And that also includes, for me, the whole transition, the need for assets or money flowing into the real economy. And then, the fourth quadrant is the investor engagement side, where that’s a lot about explaining what we do, being easier to understand.”

Part of that includes a big push for improved financial education for both youngsters and adults. “If you look at the past 15 years, what we would have achieved with very good financial education and good policymaking for channelling savings into financial products, I mean, people would be much better off today, much better off. You would have much less social conflicts. We should learn from that mistake.”

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