Interview with Oliver Maas (VSV | ASG | SAM)

As a representative of the leading association dedicated to the independent asset management industry, can you please elaborate on your key mission statement and role, as well as your strategic ambitions in terms of representing the interests of your members?

The Swiss Association of Wealth Managers, in existence since 1986 and with more than 2,600 members, is the professional and industry association for asset and wealth managers with a presence in Switzerland.

As an industry stakeholder, the association contributes to the recognition of the wealth management industry and implementation of investor protection through its involvement in self-regulation and financial market laws. At the same time, as an association for (and of) wealth management professionals,
it focuses on supporting its members in their daily business with various services across the four pillars of legal services, training, solutions and advocacy, thus ensuring their ongoing success.

The wealth management industry is a key driving force in the Swiss financial services industry, with our AuM for the industry estimated at approximately CHF 400bn. How do you see the industry growing in the future in terms of size? What will be the key drivers of this growth (e.g. sustained attractiveness of Switzerland as a strong wealth management brand internationally, etc.)?

I expect the share of the industry represented by SAM to remain stable in terms of the AuM of Switzerland’s total wealth management market, in line with a forecast annual growth rate of 1.33% for the whole Swiss wealth management industry¹.

In addition to Switzerland’s strengths in terms of financial and political stability, infrastructure quality and a highly educated workforce, additional factors must
be considered. Future growth drivers will include the ability to generate positive portfolio performance in a challenging market, successful
wealth transfer across generations, the ability to manage changing customer expectations, adapting to new technologies and the capacity to scale against increased costs.

In my view, over the years our industry has shown remarkable resilience in adapting to changing market conditions and the evolving demands of customers and regulators. This makes me very optimistic for the future growth of the wealth management industry, even beyond the forecast I mentioned before.

In August 2023, FINMA published a median AuM of CHF 61m1 , and you told the members of SAM that your own figure for this is around CHF 100m. Do you think there is a minimum AuM threshold for wealth managers to remain competitive given the FINMA regulatory requirements and increasing associated costs? What are your expectations in terms of how the regulatory environment will evolve?

As we see it, to date FINMA has essentially authorised smaller wealth managers first. Authorisation for larger structures is in many cases still
to come which should increase the median of CHF 61m to bring it closer to CHF 100m. AuM, profitability and the inherent risk of the business model are the main indicators of a business’s sustainability, with higher risks costing more to monitor. The average increase in costs resulting from enhanced surveillance by FINMA, SOs and auditors can lead to a significant increase in percentage terms, but remains manageable in absolute terms, even for wealth managers
below the median AuM of CHF 100m.

Given the regulator’s oft-cited risk- based approach, I expect the focus of the regulatory environment to shift towards risk management (e.g. business model risk, governance, independence, knowledge and experience, etc.). In addition, an important topic will be the monitoring/management of legal risks and the risks associated with the investments performed.

What do you think are the key success factors for the wealth manager business model of the future in terms of service offering and organisational set-up? Where do you see the industry evolving in terms of opportunities (for example new market entrants such as robo-advisors, financial technology companies (fintechs) etc.?

In addition to the success factors for the industry as a whole I mentioned before, the key drivers of success include a clear business model that differentiates the manner and the selection of services provided to customers, compliance with regulatory requirements, and efficiency in both operational and compliance processes. Embracing new technology seems to me to be a great opportunity to enable such success factors.

How do you see the competitive forces and ecosystem between asset and portfolio managers and the private banking industry developing?

For years, there has been profitable and mutually respectful coexistence  between banks and asset and portfolio managers. Despite competition around customer services, there are countless areas (research, products, loans, etc.) for cooperation geared to providing the best possible service to customers, in addition to the custody business. In the coming years and with the implementation of various initiatives such as Open Finance, this cooperation will gain further importance. With the support of the fintech industry, deeply rooted in Switzerland, the interaction between clients, banks and advisors will become more intensive and the roles increasingly accentuated. The key is to avoid duplication and increase standardisation.

What are the current top three key challenges for the industry?

Whether they are the top three I am not sure, but they are certainly three key challenges for the industry:

• Achieving positive investment performance in a very demanding market environment;
• Automating and standardising processes based on common industry standards;
• Reasonably implementing technology, including Artificial Intelligence (AI) and blockchain, to increase both the quality and the efficiency of services.

¹ Statista (2023). Wealth Management – Switzerland. Retrieved from https://www.statista.com

² FINMA (2023). FINMA Guidance 03/2023: Status of the licensing process for portfolio managers and trustees. Retrieved from https://www.finma.ch