18May2024
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Simplified Wealth Management: Unlocking the Power of Omnibus Accounts with Segregated Sub-Accounts

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.

Are you an independent wealth manager struggling to manage the assets of clients booked at multiple banks, lack proper multi-data interfaces, or are you fed up with the never-ending account opening process? The use of an omnibus account with segregated subaccounts may be something we should strive for!

Using omnibus accounts with segregated subaccounts is an accepted practice in specific local jurisdiction ecosystems such as the UAE and Singapore, but not in Switzerland.

Being treated as an institutional client can even reduce custodian bank costs, resulting in higher fees for the independent wealth manager and the client, focusing on one standardised SWIFT-like interface.

Maximizing Efficiency with Omnibus Accounts

Working with a reputable bank or custodian with solid security measures to protect your clients’ assets is crucial. While using an omnibus account provider may limit your ability to leverage the brand of a well-known private bank, you can open client accounts at lightning speed once approved by your internal compliance and management. You are bypassing the lengthy onboarding process at a large private bank organisation. No KYC is shared.

However, an omnibus account, which functions similarly to a correspondence- or global custody bank, presents a significant challenge for independent wealth managers regarding tax reporting. The wealth managers must handle this task since the custodian bank holds no client information. Nevertheless, a burgeoning industry has arisen to ease the burden. Additionally, to provide a good client experience, you might see yourself challenged with producing transaction advice, necessitating strengthening one’s portfolio management system or using a light bank application solution.

In summary, omnibus accounts with segregated subaccounts can provide independent wealth managers various benefits, including access to institutional investment opportunities and fee schedules, potential cost savings, and streamlined account opening procedures. However, one should not forget the challenges. Still, it would be great if an independent wealth manager could also count on such an approach in Switzerland.

Source: LinkedIn

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Simplified Wealth Management: Leveraging the Potential of Omnibus Accounts with Segregated Sub-Accounts

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