Swiss wealth management needs more than tradition to stay on top

The current Covid-19 pandemic has resulted in a significant uptick in the need for remote and digital engagement with clients for many wealth managers. None more so than for Swiss firms, operating in a market that remains the largest cross-border wealth management centre in the world, with $2.3tn in assets at the end of 2018, according to Boston Consulting Group’s 2019 Global Wealth Report. Without new tools to engage their clients, could those assets be at risk?

The Swiss wealth management marketplace is already under pressure, a result of a decade long struggle to adapt to change since the global financial crisis. According to KPMG’s 2019 study on Swiss private bank performance, published in conjunction with the University of St. Gallen, there is a backdrop of challenges including the shrinking number of Swiss private banks, the struggle to attract new assets and the erosion of operating margins. Switzerland is still the industry leader but there are challenges to face which Covid-19 will exacerbate.

Add to that additional factors like intense competition for clients, continued fee compression, low or negative interest rates, the continued flow of new and stricter regulations and clients seeking new servicing models. All of this is compounded now by Covid-19.

To fight through these challenges, now and into the future, the Swiss wealth management industry must do more to embrace technology. When speaking with various large Swiss wealth management firms on their technology focus for clients and relationship managers, while it is clear there is significant and relevant activity taking place, there remains a long tail in Switzerland of firms without a modern, flexible and efficient technology infrastructure and toolkit. 

At The Wealth Mosaic, we believe the new marketplace for Switzerland and elsewhere requires a modern technology infrastructure and toolkit. 

To support that, in April of this year, we released our first Swiss Wealth Technology Landscape Report, a directory-based report which included more than 300 solution providers relevant to the technology and related business needs of wealth managers in Switzerland. From business intelligence to data management, from digital tools to financial planning, from investment platforms to portfolio management systems, from risk management tools to back office systems, the report is aimed at providing a ‘complete’ view of what is available to the market.

Headline lessons

What did the compilation of the report teach us? I would point to three main lessons:

• There is no lack of technology and there is increasing focus and specialisation in the technology tools, both by need and user type

• The challenge with technology is often down to not technology issues such as culture, leadership, budget, etc.

• The connectivity of tools and cooperation between solution providers is creating a more accessible marketplace for more wealth managers

• Many technologies are also now more accessible (price and ‘SaaS’ online software delivery) and more powerful (computing power, cloud-based, etc.) than ever

Going into more detail and taking the highlights from the contributors to our report, I would highlight five core areas where wealth managers in Switzerland, and elsewhere, can make use of the technologies now increasingly available to them.

Client discovery and engagement – an area which has traditionally been very personnel driven, with data analytics and insights, there are now increasing opportunities for wealth managers to win new business with the support of technology. Also, by developing deeper insights into their clients, or potential clients, wealth managers can identify opportunities. For instance, in identifying their clients’ life events.  

Client lifecycle management (CLM) – the process by which the client is onboarded, managed through their relationship with the firm and, if necessary, offboarded. The coordination and process of this is still emerging but opportunities exist to automate and reduce manual tasks, to reduce the time span of activities and lessen repetition, to bring in self-service elements and create more touchpoints with the client. 

Adviser efficiency and enablement – closely-linked to the above, technology is also there to aid the adviser, whether in CRM, onboarding, data analytics, portfolio reminders, automated communications, digital communication channels, and more. The adviser has a wide variety of tools available for their needs, removing paper-based and repetitive processes, helping them personalise content and reach more clients, and more.

Digital and hybrid offerings – supporting the market to not only reach and serve more clients, a hybrid approach to wealth management also means clients can choose how they engage with their wealth manager. A hybrid approach can be applied to portfolio management, relationship management, content marketing for sales and much more. It is the alignment between the traditional, personal touch yet unscalable relationship model and the technology-enabled, faster, more efficient and scalable model, yet less personal. 

Portfolio management and reporting – in terms of portfolio construction, analysis and management, risk management and data management/aggregation and reporting. With more data feeds and tools to consolidate data, with cloud-based services and faster, more powerful computing processes, solutions exist to provide a singular view of assets, to support mass personalisation, real-time number crunching and delivery through modern digital channels. 

There are, of course, more applications such as in the area of regulation but let us not swamp the market with ideas as that will also have the downside effect of sowing confusion and engagement. It is also true to say that while big data and analytics, machine learning and artificial intelligence and other buzzwords are relevant, they are also somewhat distracting and still at their early stages. Firms need to be aware that improvements can be made through small steps rather than giant risky leaps. In the new agile development world, constant iteration is a clear opportunity to deliver change and improvement, also for the Swiss-based wealth manager. 

The approach can be like portfolio management, building a portfolio towards a goal, with a framework, constantly keeping on top of performance and allocating assets where performance is weak and opportunity might exist. This is perhaps one way to think about technological change. 

In addition, with so much more technology available in the market, it is also important that firms determine what they wish to achieve, rather than be sent into a spin by all the possibilities. Positively, with so much technology now built for wealth management and more accessible, while there are still clear risks, firms should be better placed to achieve their aims. 

For Switzerland, specifically, while its size and pre-eminence is clear, it cannot rely on its historic status and strengths alone to retain its position and continue to do business like it did in the past. The role of technology in delivering the Swiss wealth management model of the future will be key. The impact Covid-19, forcing remote working, pushing for new tools of communication, has shown that. 

Switzerland has the history, brand and market depth to maintain its leadership position. But it will not remain leader for long if it believes tradition alone will see if through. It will be those core characteristics alongside an intelligent and committed engagement with many new and powerful technology tools that will support Switzerland’s continued role as the world’s market-leading cross border wealth management centre. 

A hybrid wealth management centre, if you like. 

Stephen Wall is co-founder of The Wealth Mosaic. 

Click here to download a copy of the Swiss Wealth Technology Landscape Report 2020