Wealth Management in Switzerland 2011
Datamonitor, October 2011
The Swiss wealth management and private banking industry benefits from centuries of development as a global bank to the internationally wealthy. It prides itself on discretion, quality of service, access to international investment opportunities, and the stability of the Swiss banking system. Onshore banking business operates alongside an extensive offshore market.
Scope of the report:
- Build your customer targeting strategy using in-depth HNW demographics and needs analysis based on Datamonitor's annual Global Wealth Manager Survey.
- Assess your competition through detailed profiles of notable players, including the customer targeting, marketing and product strategies they employ.
- Size your potential client base using Datamonitor's proprietary data, presenting the number of affluent individuals by liquid asset band to 2014.
Highlights:
- Well-publicized tax amnesties, the threat of government enforcement and loss of anonymity, and the broad international consensus for improved finance and tax regulation has had an impact on the Swiss offshore banking industry. Moreover, the rapid appreciation of the Swiss franc has increased wealth manager's cost bases and reduced profitability.
- According to Datamonitor's Global Wealth Managers Survey 2011, the Swiss HNW customer is typically male and over 51 years old. He most commonly earned his wealth through entrepreneurship, earned income, or inheritance. Most of his liquid wealth is held in equities and corporate bonds. The Swiss HNW looks for advisory asset management.
- The Swiss banking industry is based on a "universal banking" concept, whereby all banking institutions can offer all banking services including credit/lending services, asset management, and deposit and securities services to onshore and offshore clients. Despite this concept, there are numerous different banking business models in Switzerland.
Reasons to purchase:
- What strategies is my competition employing to win and keep affluent clients?
- Which products and services will affluent clients in Switzerland want in the next two years?
- How is the Swiss wealth management industry structured? What role do banks and asset managers play?
- How many potential clients in Switzerland have onshore liquid assets that would allow me to run a very profitable business?
- Who are the main regulators in Switzerland and which legislation has impacted wealth managers?
OVERVIEW
-Catalyst
-Summary
-Methodology
EXECUTIVE SUMMARY
-Swiss banking faces increasing calls for transparency
-The Swiss economy is led by a strong export and services economy
-The Swiss National Bank regulates Switzerland's extensive financial sector
?Recent legislation and market issues include the European directive on hedge funds and the strengthening Swiss franc
-Switzerland's HNW population are yet to recover assets to pre-crisis levels
-Switzerland has a long-established offshore market
-The Swiss HNW individual has a moderate risk appetite and invests most into equities and corporate bonds
-The Swiss wealth management market is a mixture of numerous different banking business models
- M&A has been focused on taking advantage of competitors leaving the market
- Profiled competitors have been selected to highlight the various business models in the market
SIZING AND FORECASTING THE AFFLUENT MARKET IN SWITZERLAND
-Introduction
-Macroeconomic overview
- Macroeconomic trends and performance
- GDP
- Inflation
- Long-term and short-term interest rates
- Stock market capitalization
- Income distribution and inequality
-Regulation of wealth management in Switzerland
- Regulators
- Industry associations
-Recent legislation and market issues
- Swiss wealth manager should be aware of the implications of European AIFMD
- Strengthening Swiss franc
-Sizing the onshore affluent population
- Switzerland's onshore affluent population accounts for 32.9% of the total population
- The number of affluent individuals in Switzerland started to increase again in
- The value of assets also stopped declining and increased in
- The offshore market
- Foreign client assets outweigh those held by Swiss residents
- The largest sources of offshore AUM in Switzerland are Europe, Eastern Europe, and North America
- Tax amnesties, investigations, and treaties are reshaping the Swiss offshore banking environment
HNW CUSTOMERS IN SWITZERLAND
-Who is the Swiss HNW investor?
- Most HNW individuals are over 51 years old
- Men account for a significant proportion of HNWs in Switzerland
- The majority of HNWs have amassed their fortunes through entrepreneurship or earned income
- Swiss HNWs typically invest in equities, fixed income, and cash or near-cash products
- In broad asset class terms, Swiss HNWs have the largest proportion of their portfolio in equities
- Detailed asset class analysis shows Swiss HNWs have most invested in equities and corporate bonds
- Within two years, equities will see a minor reallocation in Swiss HNW portfolios
- There is a high demand for advisory asset management services among Swiss HNWs
- Swiss HNW individuals are seeking advisory asset management services and tax planning and advice
- Swiss HNWs currently have a strong appetite for advisory asset management
- Looking forward two years, advisory asset management will remain in high demand
- Swiss HNW individuals currently have high demand for tax planning and advice and mortgages
- Within two years tax planning will continue to be in high demand but inheritance and financial planning will also increase
- Swiss HNWs are financially sophisticated and demand face-to-face relationships
- Swiss HNWs have a higher than regional average knowledge of risk and return
- A high premium is placed on face-to-face contact
- Swiss HNWs are loyal to their wealth manager, but spread assets across numerous firms
- Swiss HNW individuals spread their assets across more than one wealth manager
- Swiss investors display a high degree of loyalty to their bank's brand and to their individual wealth manager
- Customer referrals are the most effective means of customer acquisition
- Aside from referral from an existing client, no other client acquisition technique truly stands out for its success rate
COMPETITOR DEVELOPMENTS IN SWISS WEALTH MANAGEMENT
- Business models of Switzerland wealth managers
- Domestic providers operate in both onshore and offshore banking
- Competitor trends
- M&A has been focused on competitors leaving the offshore market and local player consolidation
- Swiss banks are expanding their domestic network to focus on Swiss onshore clients
- Key competitors in Swiss wealth management
- Competitor profile: Credit Suisse
- Competitor profile: Zurcher Kantonalbank
- Competitor profile: Wegelin & Co.
- Competitor profile: Hottinger & Cie
- Competitor profile: HSBC Private Bank
APPENDIX
-Supplementary data
- Western European stock market capitalization by major exchanges
-Definitions
- EU passporting
- High net worth (HNW)
- Liquid assets
- Mass affluent
- Measures of growth
- Onshore
- Para-banking sector
- Methodology
- Overall methodology
- Global Wealth Managers Survey
- Global Wealth Model methodology
- Selected bibliography
- Further reading
- Ask the analyst
- Disclaimer
TABLES
-Table: Selected competitors in Switzerland and their corresponding business models
-Table: Key macroeconomic data for Switzerland
-Table: The AIFMD outlines strict guidelines for marketing AIFs in Europe
-Table: The management of AIFs is also covered by the directive
-Table: Affluent population as a percentage of total adult population in selected global wealth markets,
-Table: Number of mass affluent individuals by asset band (000s) 2006-
-Table: Number of HNW individuals by asset band (000s), 2006–
-Table: Number of HNW individuals by asset band (000s), 2011–
-Table: Value of liquid assets held by the mass affluent population (€bn) 2006-
-Table: Value of liquid assets held by the mass affluent population (€bn), 2011–
-Table: Value of liquid assets held by the HNW population (€bn), 2006–
-Table: Value of liquid assets held by the HNW population (€bn), 2011–
-Table: Total assets under management in Switzerland
-Table: Switzerland has DTAs including the administrative assistance standard with 31 countries
-Table: There are 24 cantonal banks which all offer wealth management products and services
-Table: Selected Swiss private banks have long-established operations dating back hundreds of years
-Table: There are numerous domestic banks focused on asset management
-Table: Foreign universal banks and asset managers have well-established operations in Switzerland
-Table: Competitor profiles by business model
-Table: Credit Suisse's sponsorship deals match its expansive global network
-Table: Key global performance indicators for Credit Suisse,
-Table: Credit Suisse wealth management private client AUM by region,
-Table: Key performance indicators for Zurcher Kantonalbank
-Table: Wegelin's discretionary management services cater for current market conditions
-Table: Wegelin sponsors numerous aid organizations in Switzerland and abroad
-Table: HSBC Private Bank specialist services
-Table: Key performance indicators for HSBC Private Bank,
-Table: Western European stock market capitalization (€bn), 2006–
FIGURES
-Figure: Switzerland has the seventh largest economy in Western Europe
-Figure: The Swiss economy came out of recession in late 2009
-Figure: Inflation remains low as the strong Swiss franc promotes increased import activity
-Figure: The target range was lowered to 0.00–0.25% in mid-2011
-Figure: The yield on Swiss 10-year government bonds has remained low since
-Figure: The SIX Swiss exchange is the fourth most capitalized stock exchange in Western Europe
-Figure: Switzerland has the 10th lowest GINI coefficient in Western Europe
-Figure: The Swiss franc has rapidly strengthened against the dollar and euro in
-Figure: Efforts by the SNB to calm the rapid appreciation of the Swiss franc have had mixed success
-Figure: Switzerland's onshore affluent population accounts for 32.9% of the total adult population
-Figure: The largest expat communities are from Italy and Germany
-Figure: The mass affluent population is forecast to recover to its 2007 high between 2011 and
-Figure: The HNW population is forecast to recover to its 2007 high between 2011 and
-Figure: The total value of mass affluent liquid assets will surpass its 2007 high in
-Figure: The total value of HNW liquid assets will surpass its 2007 high in 2012
-Figure: There are more foreign assets managed in Switzerland than domestic assets
-Figure: Europe is the largest source of offshore AUM in Switzerland
-Figure: Most Swiss HNW individuals are over 51 years old
-Figure: Men account for a significant proportion of Swiss HNW individuals
-Figure: Swiss HNWs have most commonly amassed their wealth through business/entrepreneurship, earned income, and inheritance
-Figure: Swiss HNW individuals invest more than the regional average in alternative investments
-Figure: Swiss HNWs favor equities, corporate bonds, and deposit savings as well as precious metals
-Figure: Swiss HNW individuals will not significantly change investment habits within two years
-Figure: Discretionary, advisory, and execution-only services are widely available in Switzerland
-Figure: Advisory asset management services are in high demand in Switzerland
-Figure: Current demand for asset management services will not change within two years
-Figure: Tax planning and advice is in high demand in Switzerland
-Figure: Tax planning will still be in high in two years alongside growing demand for financial planning
-Figure: Swiss HNW have complex characteristics that must be managed efficiently by their managers
-Figure: Face-to-face relationship management is very important for Swiss HNW individuals
-Figure: Face-to-face contact occurs once a quarter between wealth manager and client
-Figure: Swiss HNW individuals spread their assets across more than one wealth manager
-Figure: Swiss HNWs rely on the advice of someone they know when choosing a wealth manager
-Figure: Referral from an existing client is the most successful new client acquisition technique
-Figure: Client events give private bankers the opportunity to contact clients face to face
-Figure: UBS and Credit Suisse are Switzerland's two largest banks
-Figure: Wealth managers have opened new branches in Switzerland to expand their onshore presence
-Figure: Credit Suisse also offers an advanced iPhone app version of the Direct Net online platform
-Figure: Credit Suisse Group maintains a Twitter feed
-Figure: The Americas represent the third largest source of wealth management AUM for the bank
-Figure: ZKB's Twitter page has only a small group of followers
-Figure: Wegelin maintains a Twitter page, Facebook page, and RSS feed
-Figure: Hottinger has expanded substantially since
-Figure: The HSBC private banking global network is extensive
-Figure: Global Wealth Managers Survey 2011 geographic coverage
- Admiral Group plc
- Aviva Plc
- Bank of England
- Banque Cantonale du Valais
- Banque Cantonale Vaudoise
- BBVA
- Colgate-Palmolive Company
- Companhia Siderurgica Nacional
- Credit Suisse Group AG
- Fortis
- General Mills, Inc.
- Hutchison 3G UK Limited
- ING GROEP N.V.
- Lombard Odier Darier Hentsch & Cie
- Morgan Stanley
- Pictet & Cie
- Rathbone Brothers Plc
- Royal KPN N.V.
- Shanks Group plc
- Société Générale
- Stemcor Holdings Limited
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