Banks, insurance companies, advisors: who does what in Switzerland
The country’s two largest banks, UBS (the world’s largest wealth management bank) and Credit Suisse, together have more than 50% of the country’s banking business. There are 24 cantonal banks, which have traditionally financed local businesses including agriculture and a large number of mortgages. Raffeisen, an affiliation of several independent banks, is in a category of its own. In addition, there are numerous “other” banks that do a variety of financial jobs, from offering mortgages to selling highly specialized financial products. The trend, says the Swiss Bankers Association, is the convergence of different parts of and activities in the finance industry. The banking industry is self-regulated to a larger extent than in most Anglo-Saxon countries.
The postal service, La Poste, also provides financial services and competes actively with the banks.
Where to turn for financial advice
You have two choices when you decide to try to make your money work better for you. You can either do it yourself or search for advice. If you want to go it alone, you should be honest with yourself about how well-equipped you are to be your own advisor, says Chris Marriott at Blackden Financial. Do you have the time and the resources? Do you in fact understand what you already have in place?
On the other hand, looking for advice can be daunting. The financial industry accounts for 15% of Swiss GDP, and 5% of the workforce are employed by it, so there is no shortage of people who will offer to help you. Keep in mind that it is important to get advice in a language you understand well. If this is not the case with French, for example, you might want to consider looking for someone who speaks your first language.
Be aware that the type of counsel available here doesn’t quite match what’s on offer in most English-speaking countries. In the UK, for example, agents work for companies that sell financial products and independent advisors work for the client. In Switzerland, there is no identical model. Under the regulatory system in Switzerland, asset managers – which are not banks – are governed only by the country’s Money Laundering Act, which usually covers them through their affiliation with a self-regulatory organization. They provide a useful service and account for 3% of all money under management in Switzerland. Comparison shopping is a good idea.
The most obvious source of information is your bank, which probably sends you material regularly on its retirement plans and mortgage deals. Swiss bankers generally sell products rather than offering financial management advice, so don’t expect more than a comparison of a bank’s own products unless you have at least CHF 1 million you want them to manage. If this is the case you’ll be sent to the bank’s wealth management division, where a million is at the low end of the scale.
Another option is a financial advisory company, with some of these specializing in advising expatriates. Globalization is making an impact here: British clients have traditionally been the largest target group but this is changing. The Lake Geneva region includes far more English speakers than resident British citizens, and most such companies have developed good expertise or partnerships with tax and legal advisors to deal with US clients. They also handle, although to a lesser extent, English-speaking expatriates from other countries. (see GenevaLunch resources).
These companies can advise you on an overall financial strategy, but clients typically come to them when they are looking for solutions to specific problems, from buying property to saving for university educations to investing an inheritance. These problems are often tax-related and involve funds in more than one country.
Some of these companies call themselves wealth managers, to emphasize that they are not selling single products, such as investment funds. Wealth management is a term which traditionally in Swiss banking is reserved for clients with considerable wealth, and it’s the area where Swiss private banks have made their name. New York and London are the two largest centres of wealth management in the world, with Switzerland in third place. As a result of more flexibility in financial markets and tough global competition, financial advising in Switzerland has changed a great deal, with more products and more services available.
The most fundamental change is the idea that “wealth” of less than millions can and should be managed.