Independence, the ability to select the best solutions and close relationships with clients will be the key competitive advantages over the next twenty years. With clients constantly challenging established practices, independent asset managers therefore have every reason to believe they will ultimately succeed in establishing their value proposition.
When discussing the future of wealth management, most analyses focus on the players themselves – be they private bankers, independent asset managers, technology providers or regulators.
The real question, however, lies elsewhere.
What are private clients looking for today? And, above all, what will they be looking for in ten or twenty years’ time?
In my view, the answer to this question is already shaping the landscape of tomorrow – a landscape in which independent asset managers will play a leading role, and may even become, within twenty years, the dominant model for private wealth management in Switzerland.
This assertion may seem bold in a country historically associated with major private banks. Yet it is based on a simple reality: clients’ expectations are evolving faster than the institutions that serve them.
Why the banking model is under pressure
For decades, Swiss private banking has epitomised a certain standard of excellence. It has built a global reputation founded on stability, discretion and quality of service. However, the new generations of entrepreneurs, sportspeople, executives and high-net-worth families no longer judge the quality of a partner by the size of its offices, the thickness of its brochures or the number of exclusive events to which they are invited.
If we were to reinvent wealth management from scratch today, would we really build the dominant model of the last century?
The client of tomorrow is already here. They have access to information like no previous generation has ever had. They compare offers, challenge established models and demand far greater transparency, often with the help of artificial intelligence. They are looking for a partner who supports them, whom they can contact at any time – even via WhatsApp – rather than a salesperson who approaches them according to their own schedule. And it is precisely in this area that the independent model holds a considerable structural advantage.
A systemic conflict of interest
In banks, the adviser finds themselves in an awkward position. On the one hand, they must serve their client’s best interests. On the other, they operate in an environment where commercial objectives may encourage them to favour certain in-house solutions. The conflict of interest is not necessarily individual; it is often systemic. When an institution produces its own funds, its own certificates or its own investment solutions, a natural tension arises between the client’s interests and commercial imperatives.
The strength of the independent fund manager: their freedom of action
In contrast, the independent manager advises; ultimately, they have nothing to distribute or sell. Their duty is to select the best solutions available on the market, regardless of where they come from. Their scope is therefore considerably broader, as they can access the full range of available solutions and construct asset allocations that are genuinely aligned with their clients’ interests.
Independent wealth management also provides access to institutional rather than retail investment classes, which are generally less expensive. This aspect is often underestimated, yet it represents a major driver of value creation. A difference of a few tens of basis points in annual fees may seem marginal in the short term. Over twenty years, however, the cumulative effect becomes substantial.
The independent asset manager also enjoys a degree of freedom that few other players can claim, as they are able to recommend several custodian banks, select the best experts and design a truly bespoke solution. They act as a conductor, coordinating the various skills and resources mobilised around the client.
Their role is to advise, not to sell. This distinction is fundamental, because it is precisely when the roles of adviser and salesperson become blurred that conflicts of interest arise.
The ideal size: neither too small nor too large
That said, not all independent asset managers will succeed. The future belongs to those players who achieve a sufficient critical mass. Switzerland still has nearly 1,500 independent asset managers. This diversity is an asset, but it does not automatically guarantee excellence. To gain access to the best partners, the best technological infrastructure, institutional solutions or private markets, a certain scale becomes essential. The independent asset manager of the future will need sufficient resources to invest in talent, systems, compliance and research.
But they will also need to avoid another pitfall: excessive growth. When organisations grow too large, they risk replicating the very flaws they set out to correct. Hierarchical layers multiply, processes become more complex, meetings take the place of action, and the focus on the client gradually erodes.
The temptation to standardise solutions, industrialise consultancy and prioritise profit margins over the client’s interests then re-emerges.
The challenge over the next twenty years will therefore be to strike the right balance between the scale needed to be credible and the agility essential to remaining close to the client.
AI is accelerating the pace, but trust remains the key asset
Technology will play a decisive role in this equation. Artificial intelligence sometimes raises concerns about the future of advisory professions. On the contrary, I believe it will strengthen the value proposition of independent asset managers. Wealth management remains a profoundly human activity. We have the advantage of being close enough to our clients to really get to know them, to understand their history, their plans, their concerns and their aspirations. No algorithm will ever replace the trust built up over the years.
On the other hand, independent asset managers must fully embrace artificial intelligence. It will enable us to be more efficient, more responsive and more relevant. It will automate administrative tasks, improve analysis and enhance the quality of service without requiring a disproportionate increase in staff numbers. It will enable entrepreneurial firms to compete with much larger organisations. The challenge will then be a human one. We will need to attract a new generation of professionals capable of mastering these tools intelligently and securely, whilst retaining the critical thinking and discernment that are essential to our profession.
Why FINMA must preserve diversity
Finally, one aspect strikes me as essential. It is absolutely vital to preserve the entrepreneurial spirit that is the strength of the Swiss financial centre. Switzerland is a country of SMEs. Over 99 per cent of our businesses are small and medium-sized enterprises, and nearly two-thirds of the working population are employed by them. Our prosperity has not been built by a handful of all-powerful giants, but by entrepreneurs capable of innovating and adapting quickly.
Why should wealth management be exempt from what underpins our country’s economic success?
For this model to continue to thrive, it is essential that the regulatory framework remains proportionate. Investor protection is essential, and no one questions the need for robust supervision. On the contrary, the entry into force of the LSFin and the LEFin has helped to further professionalise our industry and strengthen client protection.
But regulation must protect investors without discouraging entrepreneurship. This is the delicate balance that FINMA is called upon to maintain in order to guarantee both client protection and the dynamism of our financial centre. It is essential to recognise that not all business models present the same risk profile. In our line of work, personal contact is often the primary tool for risk management. Contacts are frequent. Clients’ financial situations are assessed holistically. Decisions are taken as closely as possible to the client. Proportionate regulation will help to preserve the diversity, competitiveness and capacity for innovation of the Swiss financial centre.
In future, trust will take precedence over size
For a long time, the wealth management sector believed that bigger meant better. I believe that the next twenty years will demonstrate exactly the opposite. For the client, quality is not measured by the number of offices, staff, hierarchical levels or products on offer.
It is measured by the ability to receive objective advice rather than being steered towards specific products. It is measured by the ability to select the best solutions on the market, without limiting oneself solely to in-house solutions. Finally, it is measured by controlled costs, greater responsiveness, a more direct relationship and a partner who is genuinely available when important decisions need to be made.
The value of a wealth manager will never be measured by the breadth of a product catalogue, but by the trust they inspire in their clients.