18May2024
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A Potential Paradigm Shift in Swiss wealth management: A Closer Look at the Role of Custodian Banks

Disclaimer: The views and opinions expressed in the vapa Swiss independent wealth management blog posts featured on this page are solely my own and do not necessarily represent the views of any institutions or organisations I may be associated with. These posts are intended to share personal insights and perspectives and should not be interpreted as official statements or positions of any affiliated entities.

Recently, I conducted an informal LinkedIn poll that revealed an intriguing sentiment: among Switzerland’s independent wealth managers, the reputation and size of custodian banks might be losing their perceived significance. Please note, this observation is solely my interpretation and should not overshadow the fact that banks continue to play an indispensable role in the daily operational realities of wealth management.

Historically, such shifts and changes have repeatedly occurred, often driven by client preferences influenced by adverse media reports about a particular institution. However, we are now seeing wealth managers initiate a reallocation of client assets. They seem to be reacting to increasingly complex account opening procedures, the outcomes of which remain uncertain due to the differing perceptions of the multiple parties involved. This situation reminds me somewhat of my school days, where one teacher would consider my essays top-notch, while another, a different person, would find them unsatisfactory.

Given this context, wealth managers might favor smaller banks that involve fewer decision-makers in client onboarding. Such a setup streamlines and makes the procedures more efficient. It also implies that one person carries the responsibility, making the process more transparent for all parties, especially for the FIM/EAM Desk, and allowing the account to be opened faster.

Shifting Dynamics in Wealth Management: The Rise of Independent Brands

This evolution is encouraging. In the past, relationship managers at independent wealth managers often used the custodian bank’s brand name as the cornerstone of their acquisition strategy. Today, this approach is changing, with wealth managers increasingly portraying banks as background actors—as facilitators.

In this shifting landscape, the future choice of a custodian bank may depend less on size and brand and more on its ability to provide efficient and seamless service to wealth managers. These changes could alter the dynamics among the various players in the world of independent wealth management in the medium term and might offer smaller custodian banks with a track record of reliable service an opportunity to shine.

Indeed, it’s a fascinating time of potential transformation in the industry, and it will certainly be interesting to observe how these evolving attitudes towards custodian banks unfold over the coming years. Consequently, the wealth management sector could be moving towards a future where value is derived not from the sheer size and reputation of the custodian bank but from adaptability, client service, operational efficiency, and ultimately: The Brand of the Independent Wealth Manager!

Source: LinkedIn

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