Head of Frankfurt Office - Managing Director at Arendt & Medernach Germany GmbH

Jacobs’ Role and Responsibilities at Arendt & Medernach Germany GmbH

I am a lawyer specialised in investment law setting up investment funds in Luxembourg as well as advising on any regulatory matter during the funds´ life cycle. In my role as the head of Arendt & Medernach´s representative office in Frankfurt, I am coordinating Arendt´s activities on the German market in particular, I ensure a close relationship with our German clients and peer law firms we are working with on German law matters as we are only advising on Luxembourg law.

Risks Financial Institutions Face

Key risks stem from insufficient and translucent communication with investors. In times of high volatility, the timely and comprehensive information of investors about fund performance and any related matters is key to a stable manger–investor relationship which prevents investors to redeem their investments or in serious cases to seek litigation. Digital communication tools and investor portals may be used to ensure a continuous information flow to enable investors to assess the risks of their investment and to get in touch with managers in relation to queries.

Critical Lessons about Crisis Management Benefitting Professionals

To be prepared for “black swan events” as those seem to appear more often in the recent past and to make regulation and communication with stakeholder a priority. Although the regulatory burden seems overwhelming for managers to some extent, the diligent compliance with the applicable rules and the design of suitable internal processes help preparing for quick and precises actions in situations that no one expected building up resilience of an organization.

Technologies Enhancing Client Relationships and Operational Efficiency

The use of digital onboarding tools for AML/ KYC, settlement and digital reporting platforms for managers and investors. Platforms can be used as single point of information and truth by all stakeholders leading to more efficiency and transparency. Digital tools for the settlement of financial instruments extent the variety of products available to investors also fostering the retailization of private assets.  

“Never be satisfied with results, questioning current approaches always being open to new views and new techniques. Never stop learning.”

Impact of Recent Regulatory Changes on Financial Institutions in Germany

Regulatory changes enhancing the legal framework for investment funds are due and have been in scope of various legislative initiatives since 2022. However, political agreements are not easily reached and the process seems to be rather dripping than flowing and have now come to a halt until a new government is elected and has assumed office. Some proposed changes like an infrastructure quota for insurance investors or provisions with respect to investments by insurance investors through special funds are highly appreciated by German market participants. This could bring more flexibility to market participants and investment fund structuring in Germany and Luxembourg.  

Evolution of the Financial Sector

The retailization of private assets. Studies state that access to private assets by retail clients is imminent for managers to maintain their business models profitable as investments by institutional investors might in the future not be sufficient to satisfy financing needs. Currently, an increase of financing needs for matters that formerly belonged to sovereign budgets requires an inclusion of retail investors in efforts to fight climate change, digitalization and social & health infrastructure. In addition, the participation of retail investors in investment opportunities that finance such projects does also enable them to benefit of higher yields of their investments which democratizes the access to financial markets. The latest product which is being used in this respect is the European Long Term Investment Fund (ELTIF). In our practice we see a large number of ELTIF projects pursuing investment strategies in infrastructure and private equity. These products provide for a high level of investor protection while actively supporting the real economy.

Actionable Advice for Professionals in the Financial Sector

To never be satisfied with results, questioning current approaches always being open to new views and new techniques. Never stop learning.