Swiss Asset Management -
an opportunity for the Swiss financial center
By Dr. Andreas Schlatter, Head of UBS Global Asset Management Switzerland
Switzerland is known for private banking. However, the sector has been undergoing significant change for a number of years now. The establishment of a top location for asset management within the Swiss financial center would thus be of great benefit.
Since time immemorial, the emphasis in Switzerland has been on private banking rather than on institutional asset management. In less specialized circles, the economically important activities of the asset manager are not very widely understood even though asset managers build bridges between the investment universe and the investment requirements of various client groups. Besides pension funds, insurers or foundations, asset managers' clients also comprise private investors whose assets are managed via mandates and investment funds.
Asset managers understand their clients
Asset managers understand the opportunities and risks of the different asset classes and recognize their clients' requirements. With their expertise, they provide clients with access to investments, select investment instruments for them, and manage these instruments on their behalf, all the while ensuring proper diversification and managing investment risks with the aim of generating a suitable return.
No asset management culture in Switzerland
Unlike in other countries, an independent asset management culture has not been established in Switzerland. This is a pity, for it means that the Swiss financial center is missing an opportunity to position itself more broadly. A “Swiss Asset Management” that, as a brand, represents a high level of reliability, independence and quality at the highest international level could open up new growth prospects for the financial center.
Establishing a Swiss Asset Management location would be worthwhile
A study carried out by Boston Consulting Group (BCG) showed that, in 2010 already, asset management in Switzerland generated income of CHF 6 billion, and BCG forecasts additional income of CHF 900 million by 2015. Establishing a globally recognized asset management location in Switzerland could, according to BCG, generate an additional CHF 900 million.
Switzerland has a good hand
An asset management growth strategy would thus be worthwhile from an economic perspective, and Switzerland is in a good position to implement one: it has the stable political, economic and currency environment, the availability of a skilled labor force, a liberal and open labor market as well as a well-developed financial market infrastructure.
Performance should pay off
However, there is room for improvement in terms of success factors. A leading asset management location stands out through its performance culture. It is of crucial importance to recognize and honor performance. A top asset management location will never be established through mediocrity. This also means that good investment performance is rewarded and has its price. A unilateral cost focus in the selection of investment strategy is far too narrow a perspective and offers no long-term benefit to any investor.
Good regulation is a competitive advantage
If Switzerland is to succeed in establishing a top location for asset management, the regulator's understanding, and hence the role of the Financial Market Supervisory Authority (FINMA), must change. The one-sided focus on investor protection needs to give way to an integral view. This does not, however, spell an end to incisive supervision, as organizational measures need to be specified, which will be binding on asset managers in the prevention of conflicts of interests.
No "Swiss finish"
Efficient and internationally recognized regulation allows market access to be secured, or maintained, on an international level in such a way that services and products from Switzerland can be offered in other countries. In order to achieve this objective, it is advisable to rely on internationally recognized regulatory standards and to waive the special Swiss provisions (Swiss finish) wherever possible.
Switzerland has excellent prospects for upgrading the current financial center by establishing an internationally recognized top location for asset management and thus for generating new growth. However, international competition does not stand still. If this vision really is to become a reality, it is high time for all the players in the financial center to pull together. Besides asset managers, this also requires banks, insurers and other major investors such as pension funds and the politicians that set the regulatory framework to work together.
Dr. Andreas Schlatter
Head of UBS Global Asset Management Switzerland
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