Martin Maurer, chief executive officer of the Association of Foreign Banks in Switzerland, speaks about the evolution of the country as a financial and wealth management centre, the emergence of new wealth players and transformation of traditional private banks, as well as the wide range of alternative investment opportunities in the country.
Here is the transcript:
Emmanuel Daniel (ED): I’m very pleased to be able to speak with Martin Maurer, the CEO of the Association of Foreign Banks in Switzerland. His office is just around the corner, and we’re having a chat about Switzerland as a financial centre. Just give us a sense of where everything is right now, in terms of the wealth management industry in Switzerland. What would you think are the top highlights in the industry right now?
Martin Maurer (MM): We have come relatively quickly in the last ten years from an older model which was based on a very restrictive way, with banking secrecy. We are now much more open, although confidentiality is still a very important issue. I guess we are still very – history, for us, is important. What we did, how we did it; we don’t change that in one day, but we adopt to new situations. We want to be predictable, we want to be accountable, and we are more transparent within very clearly defined rules.
That includes our know-how, which we bring from the past and from history. It is still very important, and still very much up-to-date. We change it, evolve it. We have innovated in the way we – in the process, in the way we talk to people, both in our client relations, and then, of course, technology. Technology has always been a very important issue. We always have a very high rate of reinvestment in the capital stock of banks, and we have a very modern banking system.
ED: Give us a sense of banks and non-banks, like the telcos and so on.
MM: Outside of the banks, we have the most important financial players and the classical wealth managers which don’t have an account, which give advice. But in a sense, those are usually the same level and the same processes as the banks, because usually they’re have-been bankers that went down and do advisory wealth management. So there, we see more modern people, more dynamic people than we did ten years ago. It’s also a generation question.
And then we have, of course, now, the new thing is fintech, crowdfunding. There’s not much noise about it, but that is very typical for Switzerland. You don’t make so much noise, but when you do it, you do it properly. It always takes a while, but once it catches on it grows very quickly.
On wealth management
ED: What’s growing quickly in Switzerland right now? The fund management industry grew from nothing, and then Switzerland won back its position in asset management; that was in the 1990s. So, what’s current? What’s fast-growing? What are trends today?
MM: The trend is still wealth management; that is still the most important business. We have a bit more now in trade finance, corporate finance. But wealth management is broader; it’s not only managing financial wealth. It’s really trying to understand that each client is like a small company with its own balance sheet. What is profit and loss? What does the person want? What does he need in terms of information, in terms of management, management of art, management of real estate, management of non-financial assets? That is becoming much more important. You also have a shift in clients. European clients tend to get less important than non-European clients, and those non-European clients have different needs. Their family, they have needs in advising that go beyond classic portfolio management.
ED: When we say, “wealth management,” or just the word “wealth,” we’re talking about lifestyle; we’re talking about art; we’re talking about branded goods. All of which Switzerland is famous for: you go to Geneva, you see Patek Philippe, other brands here, and so on. How is it all coming together? Who are the kinds of clients who come to Switzerland to seek advice, to do things? What is their asset composition looking like right now?
MM: There are two broad classes. One is family-office type of service, we have a lot of family offices here, which try a very broad way of managing these financial and non-financial assets. And the other are those who really come for the service itself, the trading. In Switzerland you can trade on basically all stocks in the world, you can trade in all currencies. We are multi-currency, multi-stock. It’s really not just a saying, it’s reality. You can’t do it in Brazil; you can’t do it in Asia, in Australia. And not so in pounds or banking in dollars and euros, but you have it very, very broad. People who say, “Okay, look. I have my family services, but I want to have a bank that allows me to sell and buy very quickly,” then want real execution of that and to get special advice, those are the second group that come to Switzerland.
ED: In terms of sovereigns, governments and relationships with other countries, like the wealth management centres of Singapore, Hong Kong, Luxembourg: how does Switzerland position itself?
MM: We position ourselves as an independent country, an independent European country with a long, long track record. We have gone through many, many difficult phases and no other providers can say, “Look, we managed all these, not only good times, but also bad times.” For that, Singapore and Hong Kong are much too young, especially in that region. Luxembourg has an upper hand within the EU; on the other hand, they depend very much on what the EU is doing. That’s where we try to say, “If you’re looking for a good, independent place in Europe, then Switzerland is the place.”
ED: If someone came to visit Switzerland and wanted to get a sense of how wealth is managed here, what would your top-of-mind recommendations be?
MM: If he wants to talk to a specialist, he could talk to a wealth manager, be it bank or non-bank. Or, he can just walk through Geneva and Zurich and have a look at what wealth management can be, what it can do. As well, you have the big watch companies, you have the fiduciary companies, you have the art dealers here; so, you’d see how broad the understanding of wealth management is.
ED: How have the family-owned private banks evolved since all the regulations have come into place?
MM: The fact is that the classical bank owner who has actually responded with his own money has disappeared, because they changed into share companies, simply because of big litigation risks they had. There was always the saying, “You should never have higher risks than your own monies,” and they have changed that. But they’re still owners of the banks, and they have become more international and get much more innovative in products. They try things, they go from hedge funds, other things. They have broadened their product. That’s why they are much better. They are modern, but they’re still very traditional in knowing how far to go with taking risks, and not going further than that.
ED: Martin, thank you very much for spending time with me this morning.
MM: It’s been a pleasure, thank you.Categories: Financial Technology, Retail Banking, Technology & Operations, Wealth Management