The Evolution of Personalized Investment Strategies in Swiss Private Wealth

[aneettajohn]

Changes in the market environment are forcing organizations to look for new ways to offer their clients personalized services. The developments are prompted mainly by the regulatory changes introduced by FINMA, the implementation of tax transparency measures, and the emergence of non-bank financial experts (the so-called EAMs). More and more wealthy clients from Geneva, Zurich, and Lugano abandon traditional multi-asset mandates in favor of tailored investment strategies.

Creating truly customized personalized investment strategies in Swiss jurisdiction has a move past using only simple questionnaires on risk tolerance. Wealth management today employs open architecture platforms giving investors a chance to customize their portfolios with traditional public securities, direct investments in private equity, real estate, alternative credit, as well as using local ESG. The role of unique legal or tax vehicles such as Swiss PPLI or family trusts, makes an essential part of the personalization process. These instruments permit customized asset allocation free from tax ramifications while allowing simple multi-jurisdictional succession planning.
The advancement in technology is equally important. Wealth managers in Switzerland combine excellent knowledge and modern portfolio management technologies to run real-time stress tests, scenario modeling, and currency hedging in compliance with each client’s international presence. Importantly, the new tripartite model, whereby a reputable Swiss bank keeps custody, an independent asset manager makes investment decisions and there is a transparency in supervision guarantees that unique investment strategies are being implement free from any risk of conflict of interests.

Despite the benefits of hyper-personalization, there are special challenges to work with. Customized portfolios come with administrative hurdles and simply complicated, continuous reporting processes.

For family offices, private bankers, and anybody who is looking for investment options in Switzerland: How best are you able to meet the challenge of hyper-personalized investment products against the background of the need to be cost-effective? Are discretionary mandates less in demand than various types of active custom investment advisory across the world?