Change is a must—not a maybe—for Swiss IAM firms seeking to thrive.
London, 13 September 2013 – After significant growth through the 1990s and early 2000s, Switzerland's independent asset management (IAM) market is today threatened with significant change. Its business model no longer seems to provide the prospect of survival, let alone growth, for many firms, according to a new report from Aite Group, Switzerland's Independent Asset Management Sector: The Shape-Shifters.
Though consolidation and retreat appear inevitable, brave firms and service providers are adapting to the market's harsh realities, and a new caste of players—the "shape-shifters"—will replace the dying old guard. Whether by developing new offerings or working in partnership or collaboration, these players may represent a significant part of the future Swiss wealth management universe … if they prosper.
Switzerland’s IAM segment has reached several-thousand businesses today and controls up to 12.3% of all Switzerland's assets under management. Like their peers across the private banking and wealth management industry, Switzerland's IAMs are now threatened with significant change from the rumbling impact of the global financial crisis. Market characteristics that once drove growth, such as independence, micro-sized firms, and a non-institutional approach, are now weaknesses as the market faces a roller coaster of changes such as increased regulation, a huge shift in focus to taxed assets, and a background of rising costs against diminished income.
This research examines three groups of shape-shifters that are effecting change—IAMs, custodian banks, and service providers—as well as nine areas where shifts are taking place. For IAMs, this means entering new markets, launching new products and services, M&A and recruitment, internal infrastructure offerings, and European passporting; for custodian banks, this means online services; and for service providers, this means service platforms, IT services, and outsourcing. The report also profiles 13 businesses that represent shifts across those areas of change and a viable route forward.
"This is thrive-or-dive time," says Stephen Wall, senior analyst in Wealth Management at Aite Group. "Shape-shifters recognize the challenge and are developing new ways to push their businesses into the future. They are at the vanguard of the Swiss IAM market and have either repositioned or are repositioning their existing propositions to ride through these broad challenges, or they have a proposition that appears well placed to benefit them. While many in the space might be unprepared or unwilling to change, a solid core of IAMs, custodian banks, and service providers is shifting to fit with the new conditions of business."
Aite Group's Wealth Management clients can download the report here.