About Coup d’Oeil
Wealth managers find themselves in a new paradigm of fierce open competition and shrinking margins which is quite new to them.
Financial crisis triggered low interests rates on the one hand, and debit interests on cash accounts on the other, which altogether are still hurting wealth managers profits. It also triggered the end of banking secrecy and an unprecedented regulatory uplift that is here to stay or even increase.
The market is no longer increasing (which previously allowed a gentlemen competition), but on the contrary is in sharp contraction in Switzerland [1], while the number and typology of the competitors increase [2] and the clients are more demanding [3].
The sharp decline in the number of players in Switzerland did not reduce tensions between “survivors”.
Because the adaptation of the industry goes much slower than the conditions are deteriorating.
As a result, the entire industry is losing its competitiveness in Switzerland.
Moreover, the players are hardly differentiated. They were used to offer more or less the same products and services under tax efficiency selling proposition. Now that the horizons are darker, they need to adapt their offering and communication to stand out from the competition with renewed and differentiated market positioning.
Wealth managers need to define an organic growth strategy, other than picking wealth managers at a high (and ever increasing) cost from their competitors. Such an organic growth strategy would be based on three pillars: i) innovation, ii) sales and pricing performance and iii) client servicing uplift including communication and leveraging digital.
Unfortunately, this urgent need knocked at the door at the worst time, because priority was to reduce costs and risks and this took and is still taking most of management attention and projects investments.
Management attention, and moreover Leadership, is key as organic growth is not in wealth managers DNA who are traditionally more in a reactive servicing mode, the high quality of which made their success by the way.
We all know that changing the habits of people who were successful under previous conditions is extremely hard, if ever possible.
Too good to be true for competition: other financial places are seeing funds being repatriated and disrupters and new entrants are jumping in to exploit client dissatisfaction.
In this context, glancing at what is happening outside Swiss borders is very beneficial. Either to compete internationally, or to retain offshore clients tempted to repatriate their assets, or to learn from others and adapt the offering at home.
It is equally important to listen to weak signals on the technology and corporate management sides.
The aim of Coup d’oeil is to seek the following insights: How are foreign markets organized and who are the key players? What do clients expect? How does regulation and digital impact them? How do they adapt? What are the trends? What are the lessons learned for Switzerland?
As always, we value your feed-back.
Update: We are sorry to inform you that after 2 years of good service, we discontinued this weekly news briefing.
[1] Share of offshore assets managed in Switzerland is monitored each year by BCG; it decreases regularly year after year and is down to 25% in 2016 from around 35% in 1999. [2] For the international clientele, Switzerland is one offshore place among others after the end of banking secrecy, while their local banks becomes a real alternative, let alone Fintech companies which can address some of the needs for some customers. [3] Financial crisis and disappointing performance incite clients at best to no longer trust their wealth manager blindly, at worst to go and see elsewhere, between the two to negotiate pricing down.
