Board Relationships Don’t Come With a Handover File
On 22 April 2026, the FCA and PRA confirmed the first phase of reforms to the Senior Managers and Certification Regime, and the change most firms noticed was to the twelve-week rule. A firm now has twelve weeks to submit an application for a senior management function rather than twelve weeks to have it approved, and the candidate can keep doing the job until the regulator decides (Financial Conduct Authority, PS26/6: Senior Managers and Certification Regime review, April 2026). The approvals themselves move faster than their reputation suggests. In the third quarter of 2025/26, the FCA determined 94.7% of applications within the government’s proposed two month statutory deadline, and the PRA managed 98% (Financial Conduct Authority, FCA and PRA confirm changes to streamline senior manager accountability and boost growth, April 2026).
That helps if the hard part of succession is paperwork. At an elite advisory boutique or a smaller fund, it rarely is. The hard part is the chairman of a listed company who has taken advice from the same senior partner for fifteen years and sees no particular reason to take it from anyone else, or the founding partner of a mid-sized fund who still chairs every investment committee and has never let a deal through without signing it off personally.
A regulatory form won't ever show that bottleneck. What decides succession in these firms is whether relationships and judgement have been handed down while the people who hold them are still in the room, and in the boutiques and funds we work with across London and Paris, that process tends to start years later than it should.
1. The Handover Rules Were Written for a Different Firm
The FCA Handbook sets a demanding standard for passing on a senior role. SYSC 25.9 requires a firm to take reasonable steps to ensure an incoming senior manager has all the information and material they could reasonably expect to need, and the guidance asks for far more than a file transfer: the material should be practical and helpful and should contain judgement and opinion rather than only facts and figures (Financial Conduct Authority, FCA Handbook, SYSC 25.9, Handover procedures and material).
Very few boutiques or funds are bound by it. For solo regulated firms, the handover rules sit with the Enhanced tier, which is reserved for the largest and most complex firms, and Phase 1 raised the financial thresholds for that tier by 30% to reflect inflation (Financial Conduct Authority, PS26/6, April 2026). A forty-person advisory partnership or a mid market fund manager is almost always a Core firm, where nobody requires a handover document at all.
The standard is still the right one to borrow. A note from a departing partner recording what the client’s chairman worries about once the bankers have left, which board member tends to block deals, who in the finance team can be trusted with an early draft and where the firm got it wrong last time is worth more than a decade of pitch books, and it can’t be written in a notice period.
2. A Board Relationship Belongs to a Person
Elite boutiques sell senior attention. The promise to a board is that the person in the room has done this many times before and will still be there on the day it goes wrong, which is why so much revenue at these firms runs through a small group of partners whose relationships with chairmen and chief executives often predate the firm itself.
That same model makes the relationship hard to pass on. Boards don’t transfer trust by introduction. A chief executive who has spent ten years ringing one adviser before every major decision will take a polite meeting with the partner’s chosen successor and then keep ringing the old number, sometimes for years after the partner has formally stepped back.
We see a version of this most months. A managing director has run the execution on five or six transactions for the same client, knows the business better than anyone else at the firm, and has never once been the person the chairman called first, even though that managing director has grown up with their client. The partner believed they were grooming a successor, while from the client’s side of the table, the MD was a very capable deputy.
The transfer only works when the partner gives up the room on live mandates, well before retirement, and lets the successor carry the difficult conversations while there’s still someone senior around to catch the mistakes. Ask less often whether the next generation is ready and more often whether they’ve ever been allowed to be the first call.
3. At Smaller Funds the Problem Is Written Into the LPA
Investors in private funds price this risk explicitly. Most limited partnership agreements carry a key person clause, and a key person event will usually suspend the investment period until investors agree a way forward. The Institutional Limited Partners Association’s guidance is that key persons should be the individuals who determine the fund’s investment outcomes rather than only its founders, that sound succession planning and smooth transitions in ownership are critical to a manager’s long-term success, and that successor candidates should be made transparent to investors once identified (Institutional Limited Partners Association, ILPA Principles 3.0, June 2019).
The smaller the fund, the harder it is to satisfy. In a manager with two or three founding partners, the founders typically source the deals, run the investment committee, sit on the portfolio boards and take the calls from the larger LPs. Associates and principals build the models and run the diligence. By the next fundraise there is nobody in the second row whom investors have watched lead a deal from origination to exit, and naming an untested principal as a key person is more likely to worry an LP than reassure one.
The people below the founders know this before anyone else does. The strongest principals at smaller funds are often the first to leave, for a platform where they’ll get a deal of their own, and the founders read it as disloyalty rather than as a verdict on how the fund is run. ILPA also identifies the harvest period as the stage where key person continuity matters most, which tends to coincide with the founders of an older vintage starting to think about what comes next.
4. The Regulator Will Still Want a Name
At Core firms the founders frequently hold the senior management functions as well as the relationships, so one departure can remove both. Every senior management function holder needs a Statement of Responsibilities and carries a Duty of Responsibility under the Financial Services and Markets Act 2000, meaning they can be held personally accountable where a breach occurs in their area and they did not take reasonable steps to prevent it (Financial Conduct Authority, Senior Managers Regime, updated July 2026). Approval must be obtained before a permanent appointee starts the role, and the documentation has to be updated whenever responsibilities change (IFLR, PRIMER: the Senior Managers Certification Regime).
The new twelve-week rule gives a firm room to cover a sudden exit, provided it has someone credible to put forward. At a firm of forty people, that is often the same short list of names that clients would accept, which means the regulatory gap and the commercial one tend to open on the same morning.
A Note of Balance
Some relationships won’t transfer, however carefully the handover is run. A chairman who chose an adviser for personal reasons may follow that adviser into retirement or to a rival, and planning will not change that. Some founders also build firms that are meant to end with them, and there is nothing wrong with a partnership or a single strategy fund that winds down when its founders stop, provided clients and investors were told as much.
There are boutiques and funds that handle this well. The common thread in the ones we know is that the founders began stepping back from client meetings and investment committees while they were still at the height of their careers, which costs them some revenue and a good deal of ego in the short run.
Conclusion
The regulator has made the formal side of senior succession faster and more forgiving this year. It can’t hand a board relationship from one person to another, or give a principal the deal record investors want to see before treating them as a key person. Both take years, and both depend on a senior partner choosing to leave the room.
Where an internal successor exists, the work is to give them the first call early, while the partner is still there to catch the errors. Where one doesn’t, and at smaller funds that is common, the successor has to come from outside and should ideally arrive two or three years before the departure so that clients and LPs have time to watch them operate. That person is almost never looking. They are usually the number two at another boutique or fund who has been doing the work without the credit, and finding them means mapping the layer below the senior partners across the whole market, then working out which of them would move and on what terms. That research starts from the mandate and works outwards, and it has to begin while the partner is still taking the chairman’s calls.
Sources: Financial Conduct Authority, PS26/6: Senior Managers and Certification Regime review, April 2026; Financial Conduct Authority, FCA and PRA confirm changes to streamline senior manager accountability and boost growth, April 2026; Financial Conduct Authority, FCA Handbook, SYSC 25.9 Handover procedures and material; Financial Conduct Authority, Senior Managers Regime, updated July 2026; IFLR, PRIMER: the Senior Managers Certification Regime; Institutional Limited Partners Association, ILPA Principles 3.0, June 2019.
