Industry Surveys

EXCLUSIVE: Swiss Private Bank Survey Reveals Wide Quality Differences

Tom Burroughes Group Editor London 30 September 2013


A survey of 14 Swiss private banks revealed the calibre of investment advice and consultation varied widely, with outstanding performance and some poor results, this publication can exclusively reveal.

High net worth individuals often receive poor or inadequate
investment advice although some firms give outstanding guidance, such as Schroders, according to a
survey exclusively reported by WealthBriefing today.

The results of the market test are presented in detail in
the Fuchs Report `TOPs International: Best Banks for International Wealth
Management’. It is produced by The Private Banking Prüfinstanz, a Swiss
partnership, and in association with Wealthmonitor, an online proprietary intelligence service that identifies new
wealth creation resulting from potential and announced liquidity
events. (WealthBriefing has published a number of insights from Wealthmonitor and continues to do so.)

The on-site visits came from a couple of central Asia origin, who
were seeking advice on behalf of their family on investing $14 million. The
money was to be used for the benefit of the investor’s three children during
their studies in London and New York, as well as for buying a property
and with a portion of the sum to serve as a hidden asset. At the same time, a
number of different services were requested, including help in looking for a
property in London.

WealthBriefing asked the authors of the report as to how representative is this family in judging the banks' performance, and how the family were chosen as subjects in the first place. In response, they said it was important for this report to be based on an actual real set of events (ie, an actual client or potential client). "The actual region
was not that significant.
We made sure though, that the banks which were tested, look after the
chosen region regularly and that they are well experienced with
international situations.
Due to the high
individuality of this business
we keep statistical questions
of this nature easy to understand, but
not target-oriented. To our knowledge, even big banks do not have many cases on such a large scale and constellation."

The significance of the findings may relate to the fact that Swiss
firms are tapping into the expanding wealth from regions such as Asia as sources of client, sometimes to compensate for
outflows or other pressures. 

“The road to new clients is rocky, however. Not only is it
characterised by stiff international competition, increasingly with Asian
banks, too, but it is also leading internationally focused Anglo-Saxon and
Swiss asset managers into new territory with regard to consultancy. The
industry in Europe does not appear to be
adequately prepared to deal with wealthy people from other parts of the world,”
the report said.

As the old Swiss bank secrecy model comes under attack, and
firms have to add value to retain clients, the quality of investment advice,
among other services, becomes increasingly important for a banking industry
that is home to around SFr5.56 trillion (around $6.14 trillion) of money, of which about half is
managed for overseas clients.

The Private Banking Prüfinstanz, a partnership between
Verlag FUCHSBRIEFE and Dr Richter IQF, a senior academic in Hanover, Germany, contacted 18 Swiss-based
banks and carried out on-site meetings with 14 of them.

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