Stefano Fiala of Veco Invest explains why the external asset management (EAM) business has been able to flourish in Switzerland, and looks at how the industry has educated clients accordingly.

Date: Apr 2012

Tags: EAM, Independent, Switzerland, Client education, Open architecture

• The success of the EAM industry in Switzerland has been due to the fact that this model is a natural step for an experienced private banker
• To educate clients about this model takes time, because initially they want to test out a small, independent firm
• What really stands out is being able to generate performance as well as taking care of all of a client’s needs
• In today’s environment, European clients are now looking for optimisation of volatility within their portfolios, as well as an open architecture approach

According to Stefano Fiala in an interview, the success of the EAM industry in Switzerland has been due to the fact that he sees this model as a natural step forward for a private banker.

Within the 200 years or so of private banking history in Switzerland, the last 40 years has seen an impressive increase in volume, he explained. And with so many people working in the industry – given that around 17% of Switzerland’s GDP comes from the financial system – there is an increasing number of practitioners who are experienced.

After 15 to 20 years of experience as a private banker, many individuals are able to become independent in terms of the way they provide advice to clients, said Fiala.

Clients in Switzerland have understood this concept, which he added has been the secret to the development of the local EAM industry.

Educating clients over time

To educate clients about this model takes time, said Fiala, because initially they want to test out a small, independent firm.

One way an EAM can do this, he explained, is to show them the experience and track record. But what really stands out is being able to prove to clients that the model really offers an independent approach, and that the firm is able to generate performance.

In addition to performance, Fiala said that the service which an EAM gives to a client is also very important.

This means taking care of all of a client’s needs, from asset management to family governance to trusts.

Typical clients

For Veco, a typical client is an entrepreneur who, for example, might want to buy a competitor, or sell their company, or expand their business geographically.

This means having to assist such a client across many areas, which Fiala said is generally only possible to do within the structure of a more flexible firm and through having enough experience as an adviser.

Emerging client trends

In today’s environment, Fiala said European clients are now looking for optimisation of volatility within their portfolios – and they appreciate being able to generate performance without taking on too much risk.

Post-Lehman Brothers, he said it is also really important to clients that their adviser is independent and has an open architecture approach, to be able to select the best investment vehicles in the market.