Regulation biggest challenge for Swiss asset managers, survey finds

Regulation is “the most pressing challenge” for Switzerland’s asset management industry and its efforts to maintain its EU client base, according to a new survey.

On a scale of 10, regulation was rated an average 7.7 by asset managers surveyed by the Institute of Financial Services Zug IFZ, part of Lucerne University of Applied Sciences and Arts.

The second largest concern for Swiss asset managers, with a score of 6.7, was “finding new clients” – and the researchers said these challenges were linked.

“In the case of asset management, being compliant with international regulatory standards is a fundamental requirement to be able to export Swiss asset management services abroad,” the authors of the study noted.

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”.

Switzerland’s domestic asset management industry manages CHF2.2trn (€1.9trn), the survey found – 12% more than in the previous year. The country’s broader financial sector accounts for 10% of Swiss GDP.

However, the report also stated that the “limited size of the domestic market, as well as the fact that competition in asset management is global and very intense, makes it difficult for Swiss asset managers to increase their customer base”.

Respondents cited “competition” as the third largest challenge, with a score of six out of 10.

As much as 81% of the 60 surveyed Swiss asset managers offer active management; the rest offer both active and passive management.

According to the researchers, this was in line with the fact that “asset managers in Switzerland have a strong exposure to alternative asset classes” often based on active strategies.

In the study, alternative assets included real estate, which is covered by 38% of the asset managers, followed by hedge funds (35%), private equity (32%), commodities (28%), infrastructure (25%) and insurance linked securities (15%).

Together with the Asset Management Platform Switzerland, the university said it had compiled the “first comprehensive study on asset management in Switzerland”.