Overcoming the new regulatory landscape
Various structures have flourished to help Geneva-based independent wealth managers handling tough regulatory issues linked to forthcoming Swiss financial laws, but a rush to fund solutions is yet to take place.
With the entry into force of Swiss financial laws LSFIN and LEFIN expected in 2018, local independent asset managers are set to face increased regulation.
Structures called “platforms” in Switzerland have developed to help them overcome these future issues and keep their independence but differ in their offerings.
Behind one of them, AWAP, are three independent wealth managers, Anne-Sophie Tourrette (pictured), André Barahona and German Grunauer who have been sharing offices in Geneva for many years.
‘TSUNAMI OF REGULATION‘
Three years ago, when first drafts of the pending laws were issued, they pondered the best ways to address “this tsunami of regulation.”
“We have looked at the model of economic interest groups, which does not exist in Switzerland, and established a very similar structure with AWAP. We can be seen as a cooperative,” explains AWAP co-founder Anne-Sophie Tourrette.
AWAP’s team calls itself a circle of services to independent asset managers rather than platform. Its difference? Forming partnerships with external firms for various purposes – accountability, fund administration, compliance and so on.
“When independent asset managers joining AWAP develop themselves, it benefits the companies we have partnered with as well. AWAP is not a ‘profit centre’,” says Tourrette.
For example, a common investment meeting is being provided weekly by an independent adviser who gives macroeconomic as well as asset classes views and who also makes investment suggestions.
Each wealth manager member of AWAP is free to follow recommendations, invest or not in the proposed solutions.
“In addition, we have our own meetings with fund managers and providers. We share investment ideas at best practice meetings we run once a week,” Tourrette says.
“AWAP’s main edge is that members remain independent asset managers while mutualising a number of costs. We have different packages depending on the services managers wish to use. They can have access to meeting rooms and a co-working space if they only want to trim their rental cost.”
A management back-up is set up in the event something happens to a member of AWAP. Assets and clients can therefore be managed as required by another member during any absence.
Another structure, launched in 2016, is Blue Horizons Partners, whose co-founder Lionel Pasteur describes as an ‘antiplatform’.
BHP gathers three partners providing services to independent managers: Blue Lake Advisors (investments / asset allocation), Sigma Corporate Services (infrastructure / legal & compliance / IT) and Pasteur Finance (process optimisation / business development).
“We target independent managers that will be there in tomorrow’s Swiss financial landscape, those that will be able to pass through the forthcoming regulations. These companies typically have more than five employees and at least €250m in assets under management,” Pasteur says.
“Optimisation is key in the competitive market that is independent wealth management. In order to pass a landmark, independent managers can either run their activity as a whole internally or externalise some parts of their businesses to become more efficient.
“Regulation is going to modify several things but its implementation will be fragmented through time. The pressure it puts on the shoulders of independent managers is not visible yet but it can be felt. We stress that there is no emergency for them yet to adapt, but the ones that are starting to restructure their processes now will get a strong competitive advantage in the medium term,” he argues.
Tourrette points out that if an important number of independent wealth managers are looking at models such as AWAP, “we are far from seeing lots of them taking the step to join platforms at the moment.”
“They rather hold a wait-and-see attitude as they wait for the release of the texts. Once the laws are published, most Geneva-based independent asset managers might have their backs against the wall and we believe they will rush to join models such as ours,” she adds.