Over the last 10 years, Switzerland lost around 5% of the World asset management. Whereas the country managed a little more than 31% of the world’s wealth in 2003, this number dropped to 26% in 2013. In less than a year, between 2012 and 2013, not less than 18 banking institutions have gone out of business for specific reasons linked to asset consolidation or mandatory restructuring.
Despite this overall decline, Switzerland is still today the world’s number one in asset management. But for how long?
In a few years, Geneva saw its leadership challenged by emerging financial places. Its competitive advantage that made it so attractive once is crumbling every day a bit more mainly because of the homogenization of world regulations.
In order to keep their leading position in the wealth management sector, Swiss banks have taken up the challenge to become worldwide major institutional management players. The objective is clear and simple: attract in Geneva brilliant fund managers by providing them with high quality infrastructures and attractive tax law. If everything is done according to plans, fund management could become the second pillar of the Swiss banking activity (wealth management being number 1).
WHAT FUTURE FOR INDEPENDENT ASSET MANAGERS?
All the international regulations have forced independent asset managers to review their positioning. « Adapt to survive » is the new adage of the 2015 asset management. Only asset managers that have anticipated the change ongoing and having the skills and capacities to adapt could make their way through this constraining environment.
Now that Europe is going for zero tolerance, asset managers have to specialised and taking into account the regulations of each country where they have clients. Each order must be compliant with both international and national standards.
In parallel, clients are becoming more and more demanding regarding services provided and costs. With the expansion of the digital wave, asset managers should go back to basics: close client relationship and customised consulting without forgetting to provide their clients with innovative and personal tools.
THE RISE OF “ROBO ADVISORS”
The past years, many automated investment offers emerged on the market. Often released by indirect competitors who only have a little experience on the asset management sector, these offers have been spread all around worldwide financial places. It rapidly encountered success as it found the perfect positioning in a market where institutional players did not succeed on answering evolving clients’ expectations.
FinTech (standing for « Finance » and « Technology ») are reviewing the traditional asset management model by providing qualitative services at a lower price. These emerging startups are offering high quality services and are considering investing in consulting in order to enhance client’s relationship.
That is to say that automated asset management is currently thriving. Its simple operating system is facilitating its spread: the client only need to give informations about its investment preferences such as risk tolerance or amounts invested to see its wealth managed by a robo-advisor. Simple and efficient.
ADAPTATION TO THE MARKET: THE KEY TO SUSTAINABILITY?
Facing technological improvements, clients’ evolving needs and constraining regulations, the activity of asset managers is clearly threatened today. Young and flexible companies are redesigning markets forcing independent asset managers to review their old and obsolete strategies.