About
THE SITUATION
 
It is indisputable that Independent Wealth Managers ( IWM ) in Switzerland will be facing existential challenges to continue the Status Quo of their business model. This has been largely confirmed by independent studies from numerous backgrounds and sources.
 
The industry has been suffering fundamental changes over the last 10 years. Business has become more administrative, anominous, risky, technical, expensive and last, but not least, less personal and financially rewarding. The Swiss Financial Centre is adapting to this world-wide phenomenon at the risk of loosing its appeal as a discret and safe haven for personal, or corporate investors.

So far, according to the statistics it has done well, but at the expense of small to medium sized financial intermediaries and institutions.

Some facts on the IWM industry in Switzerland:
 
  • The combined estimated Assets under Management ( AuM ) of IWMs in Switzerland are in the region of 500 Bln. CHF, managed by 2,500 to 3,000 firms. 
  • This volume represents an approximate market share of 14% of total AuMs in Switzerland.
  • Close to 60% of these firms have between 1 and 4 staff.
  • More than 80% of the IWM firms have less then 250 Mio. CHF of AuM, whereas half of those less than 50 Mio. CHF.
 
It is difficult to determine the minimum base of AuMs for IWM firms in Switzerland in order to create a profitable business. The profitability depends on too many constantly changing variables. Each case is unique.
 
In conclusion, based on our research and calculations it will become troublesome for any IWM unit below 100 Mio. CHF of AuM to create a long-term, sustainable and independent business.
  
FATCA has resulted in higher workloads and limitations for existing and future businesses and determined the new direction Swiss Private Banking has been forced to take. FIDLEG and FINIG regulations that are being introduced in the near future will cause even more administration, restraints, risks and shrinking margins throughout the entire industry. The potential to grow in the new environment will be  limited. 
 
Larger financial institutions, which are the main competitors to IWMs, have the economy of scale, manpower and the financial resources to face these challenges. 

Being passive and hoping that the situation will change 'for the better', might even lead to the loss of the existing business. This will favour larger financial institutions. As a consequence, they may acquire these assets without renumeration to the former managers.
 
In summary, the Swiss Wealth Management industry is undergoing historic changes that no doubt will lead to a massive consolidation process. 
 
As a result of this scenario, LAN ADVISORY has created a new market place for potential sellers, buyers & mergers of IWM client assets. The consolidation process will force a substantial number IWMs to exit the business and some banks will eliminate certain client groups, as they do not match their profile. LAN ADVISORY is there to manage the supply & demand of this historic financial opportunity.

The Private Banking industry has realized and accepted the changing environment, but so far has no complete offering for those firms that might be left behind, not due to the quality of their service, but more their lack of client assets.


SCENARIOS & SOLUTIONS
 
The formation of new partnerships in order to achieve the critical mass of AuMs, or the engagement of external service providers to take on the ever growing administrative workload have so far been the main answers to the new situation.  Both are viable solutions, but will negatively influence the profitability and independency of businesses.
 
The co-operation with custodian banks will become more complicated in the future. The big financial institutions are aware of the growing pressure on the IWM entities and are taking advantage of this.
 
LAN ADVISORY, based on the research and interviews, strongly believes that :-
 
POTENTIAL SELLERS OF CLIENT BOOKS
 
  • More than 50% of existing IWMs in Switzerland will face difficulties in order to continue their business with a satisfying level of profitability and personal enthusiasm. 
  • Banks will continue to consolidate their client portfolios.
  • A large number of IWMs would like to exit their active business, but do not know who to approach.
  •  It is better to exit a business being rewarded rather than being forced.
  •  It is better to exit a business than being forced into partnerships as a last alternative.
  •  Any current service provider to the IWM industry will become more complicated to deal with in the future for many reasons.
  •  The typical IWM is not an administrator, but will have to become one in the future.
 
POTENTIAL BUYERS OF CLIENT BOOKS
 
  • Other financial institutions and banks are willing to purchase the client relations from exiting IWMs.
  •  The micro Mergers & Acquisition approach has been successfully adapted to other industries. It is a perfect tool to handle these types of financial transactions.
 
POTENTIAL JOINT VENTURES ( JV )
 
  •  JVs have proven to be complicated vehicles in difficult situations as they are a consequences of the circumstances.
  •  The LAN ADVISORY data base will match suitable  JV partners and make suggestions only to companies that make a fit.
 
 
THE MARKET PLACE
 
Our researchers have identified a growing demand for this kind of micro M&A on all levels.
 
The parties involved might intend to sell their entire business, or certain parts of it. 

LAN ADVISORY has already secured a number of mandates from diverse financial institutions that are able to acquire those client books, independent of the size of AuM.
 
Major financial institutions have realized that managing the acquisition of small financial units is a more efficient approach than exclusively focusing on hiring new bankers, or engaging in major M&A activities.

As the infrastructure of large banking institutions and established M&A firms are not geared for such micro transactions, LAN ADVISORY has been created to occupied that niche.  
 
The buyers and sellers will engage in a smooth selection process, which will lead into a brief due diligence and decision period. The high success rate of this 'tailored' approach will prevent frustrations and a waste of time.
 
We treat the buyer and the seller as equals. Our primary task is to set-out the business parameters before both parties meet. The more precise and honest the profiles are, the better the matching results will be in our data base.

We have establish a unique database of contact details of IWMs in Switzerland and institutions that are interested acquiring such businesses. The data base is ready to receive the detailed criteria catalogue in order to commence the profiling of matching companies.
 
Our database will create a new 'Market Place'. 
 
Please check the PROCESS section button to gain a better understanding of the necessary steps.