An interesting article about the Swiss wealth management industry.
Switzerland: Back in favour
High-net-worth clients are starting to look at Switzerland with fresh eyes due to the following possible reasons: Brexit, threat of a Labour government in the United Kingdom, political uncertainty in the Middle East, and the high criminal rate in Latin America. In any case, report shows that consultants in the jurisdiction set a record in 2019, and international client business is increasing rapidly.
Frederique Meyer, director of IQ EQ Trust in Zurich, says: “The Swiss market seems to be back in favour again, especially this month. For quite some time, Swiss funds have been transferred overseas, but now it has finally ceased. There are many uncertainties around the world at the moment, which has brought Switzerland to the attention again, and many of our previously stagnant pipeline businesses have now resumed operations.”
In a 2019 report that private banks that saw the loss of clients due to concerns about the end of the Swiss bank secrecy system have finally seen their business rebound, with managed assets setting a new record of CHF 7.3 trillion in September 2018.
Unexpected windfall due to global anxiety
Ariane Slinger, CEO of trust company ACE International, states: “Due to major political issues in many countries (including the Middle East), the banks here have attracted many new clients from all over the world. For example, many renowned families in the Middle East are transferring their assets to overseas, and Switzerland is their main option; our office in Geneva certainly noticed that. In addition, there are also many clients from Latin America as people want to safeguard their assets due to political issues and fear of crime.”
Another major source of business comes from the United Kingdom. Due to concerns about Brexit or the outcome of the general election, many high-net-worth individuals are planning to move to Switzerland or transfer their assets to Swiss banks. Meyer says: “Brexit has undoubtedly brought impacts to the country, and people are considering long-term whether to obtain banking and services from the UK.”
The fascination of Switzerland
Although the UK is fertile ground for Swiss wealth advisors, there are other reasons for the influx of clients. Heini Rüdisühli, tax partner and head of private clients at the Zurich Lenz & Staehelin law firm, states: “We still see a considerable inflow of UK people, some of them are here to reset non-resident status, while others plan to move here temporarily, but they end up liking the Swiss environment and thus stay for a longer period of time.”
Customer is king
Maria Roumy, director and partner of Geneva WM Capital, add: “Many UK clients live in the UK but prefer the great experience provided by Swiss private banking. When they speak to a UK bank, they are essentially talking to a call center. The high-quality services of Swiss private banks, coupled with Brexit, are encouraging clients to transfer their funds here. ”
Latest tax incentive for entrepreneurship
Another benefit brought by inbound work is the substantial reduction in corporate tax planned in Geneva, where the business tax rate will be reduced from 24% to 14% next year, with the purpose of retaining international companies and the local employment opportunities they create. Slinger says: “Companies will be more inclined to settle in Geneva. We have seen some people intend to set up companies here, and many clients are looking to relocate their companies from other European countries (such as France and Italy) that are suffering from social troubles.”
Perhaps the biggest change that is about to take place is that after years of industry lobbying, Switzerland will introduce a new licensing system for trustees next year. To be precise, two new legislations will take effect on January 1, 2020, introducing a new regulatory system for trustees, in which trustees must meet certain standards and requirements in terms of governance, education, and professional skills and standards. New mandatory measures include control systems and risk management processes, and the Financial Market Supervisory Authority (FINMA) will have the power to grant licenses, issue fines during enforcement procedures, as well as terminate licenses.
Regarded as A-List by Hong Kong people
David Wallace Wilson, partner in law firm Schellenberg Wittmer’s private wealth practice, states: “The new regime will reassure international families and their advisors. There is indeed a shift towards high-quality jurisdictions due to reputation reason. Professional trustees in Switzerland have been asked by international families, as the licensing regimes exist in other countries. For example, for some Asian families in Hong Kong, having a license and additional regulatory elements will put us on the A-list.”
Members have renewed interest in becoming a more organised profession and hope to cooperate to better understand and adopt the new rules.
“In the past, many clients came to Switzerland for tax reduction purposes. Now in the era of tax transparency and information exchange, they want to work with trustworthy and knowledgeable trustees that are modern-minded, as they can provide consultations in line with the social climate, while still able to help in business development and family wealth preservation. International regulations have indeed become more and more complex; Switzerland is considered one of the safest places, and the new licensing system will undoubtedly enhance the good reputation of the Swiss legal and financial industry in the long run.
STWU was founded on July 5, 2007. It is an association established under the Swiss Civil Code, with its registered office located in Zug, Switzerland.
STWU aims to promote and develop trustee activities in Switzerland, to ensure the excellence, professionalism and integrity with professional and ethical standards in the Swiss trust industry.