Independent Asset Managers Come of Age in Switzerland

Stephen Harris

28 February 2007

Private client assets run by independent asset managers in Switzerland have reached 10 per cent of the total, according to recent industry estimates, and the trend is set to continue say analysts. Estimates put the total wealth run by the independents, or external assets managers as they have become known, at around SFr400 billion ($325 billion). Around 80 per cent of these assets are run as discretionary accounts, compared with around one quarter in Swiss private banks. In 1988 there were around 500 independent asset managers running around SFr180 billion but now there are up to 2,500 EAMs in Switzerland. The advantages to both the banks and the external managers themselves are clear. The banks get to keep the custody of assets when a talented investment manager leaves to set up, or join, an independent. When the costs of the ex-employee, including marketing, are stripped out the bank can afford to cut fees which the manager can then pass onto the client or offset with own charges. The manager gets to concentrate on what he does best and can outsource accounting, compliance and back office functions to either the bank he has just left, or to a rival, whilst having access to a top rate investment platform. And there’s no question that they are pushing products from one organisation. Clients are happy too as they get access to specialist services from a variety of sources without having to deposit assets with the provider. Analysts also suggest that the trend away from big banks in Switzerland may extend to the trust business. Trusts offered by banks are thought to be too standardised for high net worth clients whose needs demand a more tailored approach that can be provided by independent trust companies, say observers.