1. Newsroom
  2. External Asset Managers must make the most of their agility
Menu
UBP in der Presse 27.06.2018

External Asset Managers must make the most of their agility

External Asset Managers must make the most of their agility

Le Temps (24.06.2018) - Independence in terms of investment policy and product selection has always been the key selling point of external asset managers (EAMs). That independence is easy for EAMs to claim when there is nothing requiring them to disclose the trailer fees that often link them to custodian banks and product platforms.


However, the price transparency required by current regulatory changes will now force external asset managers to prove how independent they really are. That will probably mean the end of trailer fees, to be replaced by “all-in” fee models, which are more transparent but less lucrative overall. As well as lower revenues, higher costs look inevitable, particularly because of tighter controls ensuring that clients’ investments are suitable for their risk profile.

In the circumstances, many believe that consolidation is inevitable. There are currently almost 2,500 EAMs in the industry in Switzerland, of whom around 80% manage less than CHF 250 million. However, building up scale may not be the only winning medium-term strategy for external asset managers, who could also find growth by using what has become a crucial advantage for them, i.e. their agility.

First of all, some external asset managers will be able to use that agility to gain a technological advantage. The simplicity of their IT architecture, which is entirely independent of banks’ increasingly complex platforms, gives them the opportunity of being at the leading edge of the digital revolution. Their ability to form partnerships with those offering the most innovative fintech solutions – in areas as varied as digital relationship onboarding, risk management, consolidated reporting and digital communication – could be a way of tackling shrinking margins.

Alliances of this kind would be beneficial in terms of both boosting revenues by attracting new types of clients, and cutting costs by improving operational processes. These technology-incubator external asset managers will select their custodian banks based on their ability to handle these new IT requirements, particularly in terms of transaction connectivity and data exchange capabilities in the broad sense. Banks would be well advised to start planning for this shift right now.

In a rapidly changing operating environment, EAMs, which generally have a simple governance structure, also have the advantage of being able to make radical, rapid changes to their strategy. In this respect, there are two underlying trends that both give the opportunity of exploring new business models, i.e. tax transparency and the digital revolution, including blockchain technology.

Wealth planning, and its tax aspects in particular, is now a central concern for clients, and therefore for external asset managers as well. The most opportunistic external asset managers will see a chance to expand their value proposition to include traditional family office services.

At the same time, some Swiss external asset managers are trying to harness the potential of the growing blockchain economy. They are being helped by Switzerland’s proactive support of this high-profile new business area. The most agile external asset managers, some of whom are actively taking part in the discussions being held by legislative and regulatory authorities, have been able to develop innovative services around cryptocurrencies or ICO (initial coin offerings) advisory work. By working with blockchain players at all stages of their projects, external asset managers are hoping to achieve obvious revenue synergies with their traditional wealth management business in the medium to long term.

As a result, consolidation and restructuring – and the pain that often accompanies them – are not the only options for external asset managers faced with changes in their ecosystem. Their business model and organisational efficiency gives them unrivalled agility, allowing them to seize the opportunities that those same changes are creating. By doing so, they can become catalysts for financial innovation, bringing with them banking partners that have the desire and flexibility needed to make adjustments and meet their requirements.

UBP External Asset Managers

Babereau_Benoit_150x150.jpg

Benoit Barbereau
Head of EAM & Wealth Management Services


Expertise

Diskretionäres Portfolio-management: Sie haben die Zügel in der Hand

Ihre Ziele und Wünsche sind einzigartig – genauso wie unser Ansatz im diskretionären Portfoliomanagement
Mehr
Expertise

Swiss & Global Equities

Why Swiss equities now? This market offers equity investors the stability and agility they need to navigate this volatile period. 

Read more
Expertise

European Equities

European equities offer unrivalled opportunities in terms of breadth of sector and market exposure.

Read more

Meistgelesene News

UBP in der Presse 23.11.2020

Frontier debt comes of age

Financial Investigator (20.11.2020) - Frontier debt has grown significantly over the past decade and now warrants serious consideration as a dedicated allocation in investors’ portfolios.

UBP in der Presse 18.12.2020

The drift towards thematic investing

Rankia Pro (12.2020) - Interview with Didier Chan-Voc-Chun, UBP’s Head of Multi-Management & Fund Research

UBP in der Presse 04.01.2021

The rise of UBP’s impact strategy

Funds Society (14.12.2020) - The first strategy in UBP's impact investing platform, Positive Impact Equity, has been going from strength to strength since its inception. Impact investing specialist Yvan Delaplace details the strategy’s investment process and broader sustainability trends in the sector.


Auch lesenswert

UBP in der Presse 12.04.2021

Impact investing’s spread to all asset classes

Option Finance (26.03.2021) – Impact investing – investing with the intention of having a positive impact on the environment and society – originated in the private equity market but is now spreading to all asset classes.

UBP in der Presse 08.04.2021

Geldpolitik nach Corona

Institutional Money (06.04.2021) - Die Pandemie stellte uns vor nie dagewesene Herausforderungen und rechtfertigte in ihrer Dramatik ein starkes Eingreifen der Politik in das Wirtschaftsgeschehen.

UBP in der Presse 01.04.2021

Gold bleibt unter Druck

Bilan (31.03.2021) - As vaccines offer a way out of the current crisis, we should see a greater rebound among small and mid-cap companies, the so-called ‘SMID-cap’ segment, than in the broader market.