Regulation is “the most pressing challenge” for Switzerland’s asset management sector and its efforts to maintain its EU client base, a survey reveals.
The study from the Institute of Financial Services Zug IFZ shows that on a scale of 1 to 10, regulation is rated an average 7.7. Swiss asset managers pointed out “the need for the Swiss regulatory framework to be in line with global standards” in order to ensure that they have a level playing field with their international competitors.
To keep up with changes in EU regulation “Switzerland should strive for an integrated solution, which should at the least provide a clear mechanism for continuous updates and ensure equivalence,” the researchers suggested. The “best case” would be to “provide complete access to the free movement of services,” the study suggests.
The second most pressing issue for the Swiss asset managers is difficulty in acquiring new clients. “A possible explanation for this observation can be found in the limited size of the domestic market, as well as the fact that competition in asset management is global and very intense which makes it difficult for Swiss asset managers to increase their customer base,” the authors of the study suggested. This problem had an average score of 6.7 in the survey.
The pressure of competition, the availability of skilled workers and high production and salary costs follow as the challenges that Swiss asset managers are more concerned about.
Access to external funding, meanwhile, does not pose a problem for asset managers in the country as their capital requirements are much lower than those of banks and insurers. This is due to the fact that they are not involved in balance-sheet business.
Asset managers based in Switzerland manage more than 2 trillion euros on behalf of domestic and international clients, which is approximately three times the size of the Swiss GDP and about twice the amount that is held by Swiss pension fund.