Wealth Management

The wealth management industry is currently facing a period of transformation. Several significant disruptive forces are simultaneously challenging established business models and forcing market participants to re-think their market positioning and organisational setup.

  • The client base is changing. Emerging economies have outpaced established ones in terms of growth rates for several years, thus becoming the new centers of wealth creation generating demand for wealth management. In addition, demographic developments in established economies will significantly increase the demand for succession planning and the transition of wealth to a younger generation over the next 15-35 years.
  • Market competition and a drop in transaction volumes is putting pressure on shrinking margins. The industry profit levels are still below pre-crisis levels.
  • The digital revolution provides a multitude of new and innovative opportunities to engage with and service clients, but has also attracted a variety of tech-savvy start-ups and sector outsiders to enter the market place and further increase the competition.
  • The increased focus by various regulatory bodies on investor protection and overall stability of the financial system is creating many challenges for the industry. However, these developments should also be seen as opportunities to gain market share through differentiation.
  • Traditional offshore models are put under severe pressure in response to OECD rules on information exchange and additional reporting obligations.

In order to prepare their business model for the future, wealth managers should prioritize the following considerations:

market participants should identify the markets in which they can most effectively maintain their value proposition and differentiate themselves from their competitors. Providing all services for all clients in all countries comes with a high price tag. Entering economies with high growth rates is very attractive, however, following the HNWI requires a thorough strategic preparation in order to avoid the pitfalls of increased operational complexity.

wealth managers should focus their limited resources on their core capabilities and do what they are best in. Streamlining the operating model and sourcing activities that are not part of the core business will free-up resources to sharpen the client focus.

Value Proposition:
our society is undergoing significant change. Mobility, around-the-clock access to information and interaction through social media are generating new customer demands. Attracting new as well as retaining existing clients is of utmost importance. Those wealth managers capable of creating an exceptional “client experience” will be best placed to maintaining and expanding their client base. This can be partially achieved through the digitization of service models.

Price for Advice:
additional pressure on the value proposition arises from the ban of inducements for independent advisors and portfolio managers. The expected loss of a significant revenue stream for wealth managers requires alternative pricing models most certainly leading to an increase in client fees. Such new pricing models will only be accepted, however, if the value proposition is truly benefiting the client and can be clearly communicated as such.

following the latest regulatory developments, market participants should aim at preventing future failures that would lead to even further and more stringent regulations. Wealth managers should focus on sustainable operating models that guarantee investment and product suitability and the necessary degree of transparency. Market participants that manage the regulatory agenda as part of their strategic evolution and at the same time maintain flexibility will be best positioned to capture market opportunities.

Booking locations and platforms:
cross border business models operate in a complex landscape of different rules and regulations with correlating legal risks for wealth managers, thus often leading to complex operating models and business processes. UHNWIs domiciled in emerging countries often demand to be booked in Europe or Switzerland creating additional layers of regulatory and legal implications. Streamlining the cross border operations based on a robust and flexible platform with the ability to quickly integrate new technologies into the system architecture are key to reduce cross border risks.

Adapting to the new realities in wealth management is demanding task and wealth managers need to address several complex and interconnected challenges to achieve their strategic priorities. We support our clients to manage these challenges successfully in all stages of their business transformation.

Key regulations for wealth managers include:

FinSA / FinIA
FinSA / FinIA

Main goal of the Swiss Federal Financial Services Act (FinSA) and the Financial Institutions Act (FinIA) is the strengthening of investor protection, minimising competitive distortions between service providers as well as strengthening the competitiveness of the financial centre.

The FinSA targets the relationship between financial intermediaries and their clients and strives for equivalence with the investor protection rules adopted by EU Member States along with MiFID II. Assuming that the current draft provisions remain unchanged, financial institutions will be required to obtain information about their clients’ financial standing and consider their knowledge and experience in financial matters when providing investment advice. In addition, recommendation of financial instruments needs to be accompanied with the hand-out of a key information document (“Basisinformationsblatt”), which should allow a transparent comparison of investment options.

The FinIA entails a differentiated supervisory regime for all types of financial intermediaries engaged in asset management. While the rules for already licenced institutions are not undergoing any material change, managers of individual client assets as well as those who manage the assets of Swiss occupational benefits schemes or trusts will come under prudential supervision.

On November 4, 2015 the Federal Council has adopted the dispatch on the FinSA and on the FinIA. The FinSA governs the requirements for providing financial services and offering financial instruments.


FMIA (Financial Markets Infrastructure Act, also known as FinfraG [Finanzmarktinfrastrukturgesetz]) regulates market infrastructures and OTC derivatives trading in Switzerland. The regulation will come into force beginning of 2016. FMIA adopts the principles agreed on by the members of the G20 at the 2009 Pittsburgh summit and, therefore, entails similar provisions on derivatives trading than the European Market Infrastructure Regulation (EMIR) and the US Dodd-Frank-Act. In addition, FMIA entails provisions for financial market infrastructures such as trading venues, central counterparties (CCP) and central securities depositories (CSD) in order to align the Swiss regulation to new standards developed by international bodies, in particular the CPSS-IOSCO rules for CCPs and CSDs.


Since its implementation in 2007, the Markets in Financial Instruments Directive (MiFID) has been the cornerstone of the capital markets regulation in the European Economic Area (EEA). As not all perceived benefits have been transferred to the end investor as intended by MiFID, the European Union decided to completely overhaul the regulation. MiFID II is thus focusing on shortcomings of the original MiFID and responds to the lessons learned during the financial crisis. Core objectives of the directive include:

  • Increased investor protection
  • Corporate governance and organisational requirements
  • Streamlining of regulations across the EU in specified areas
  • Increasing competition across the financial markets
  • Strengthening supervisory powers at national and supranational level
  • Regulating market access for 3rd country investment firms

The Markets in Financial Instruments Regulation (MiFIR) contains standards and requirements which are directly applicable in Member States without transposition in national law. Therefore, the regulation has a direct effect on trading platforms and investment firms, their systems and trading processes. The main topics can be summarized as follows:

  • Regulation of all execution venues (regulated markets, multilateral and organised trading facilities, systematic internaliser)
  • Increased pre- and post-trade transparency
  • Trading obligation in certain shares and derivatives
  • Scope and content of transaction reporting

Through a harmonised ruleset, MiFIR intends to increase the overall stability of financial markets and reduce opportunities for regulatory arbitrage between Member States. Some of its provisions, particularly the increased transparency regime, registration obligations for all execution venues and the obligation to trade certain financial instruments exclusively on-venue are likely to have far reaching impacts on the trading landscape within the EU.


The Regulation on Key Information Documents for packaged retail and insurance-based investment products (PRIIPs) came into force in EU Member States on December 29, 2014. The regulation introduces a standardised pre-contractual Key Investor Document (KID) for manufacturers as well as distributors of PRIIPs and applies inter alia to investment products such as investment funds, structured products and insurance-based products with an investment element.

On June 23, 2015 the Technical Discussion Paper on Risk, Performance Scenarios and Cost Disclosures in KID’s has been published. A Consultation Paper setting out the draft technical standards has been published on November 11, 2015 and is open for consultation until January 29th, 2015.

Please find also our our point of view on PRIIPs providing a brief summary of key topics to focus on when producing, reviewing as well as providing KIDs.