Cécile Civiale Vuiller
Switzerland continued to build on its strengths as an international private wealth hub with a focus on cross-border wealth management, despite turbulence in the banking sector following the collapse of Swiss banking giant Credit Suisse.
The Trend
The wealth industry is undergoing a paradigm shift fuelled by changing demographics, generational wealth transfer, and rapidly expanding digitalization. For generations, Switzerland has been the go-to destination for offshore wealth. Private banks are as synonymous with the Alpine state as chocolate, watches and cheese. But recent situations appeared to come the way of Swiss banks as Russian oligarchs were sanctioned and fears emerged about the demise of Credit Suisse.
Nevertheless, Switzerland will remain a strong force in wealth management thanks to its deep-rooted banking expertise and safe haven status, but Russian sanctions and the collapse of Credit Suisse shook the financial centre.
The technologies
The digital technology has revolutionised the industry with online platforms and robot-advisors, which could be making wealth management services more accessible, affordable and transparent in terms of products and pricing, but clients still value the personal touch and human interactions that comes with working with a relationship manager or advisor, particularly for more complex or emotional decisions related to their wealth & family. Finally, it is essential to note that technology like Bloomberg-GPT is not substitutes for human expertise and oversight.
The development
Inheritance law in Switzerland had undergone some interesting amendments. A degree of modernisation was needed as life expectancies increased and different forms of family life became commonplace. The new rules apply to the estates of all persons passing away from 1 January 2023 onwards.
The changes are as follow:
- Reduction in the descendants’ forced heirship;
- Abolition of the compulsory share allotted to parents;
- Impossibility of spouse or registered partner to lay claim to forced heirship while divorce proceedings are ongoing or during dissolution of a registered partnership.
Swiss trust law, as recently as 15 September 2023, the Federal Council acknowledged the results of a consultation on the introduction of trusts into Swiss law, revealing insufficient political consensus for such a move. The proposed tax rules were rejected by the participants in the consultation, leading the Federal Council to suggest Parliament’s rejection of the motion. Consequently, the introduction of a domestic Swiss Trust Law seems unlikely in the foreseeable future.
Changes to Swiss corporate law, new provisions of the Swiss Code of Obligations on corporate law came into force on 1 January 2023. These provide greater flexibility for share capital and equity distributions, improve corporate governance by enhancing shareholder rights and modernise the requirements for shareholders meetings (largely reflecting the temporary regimes adopted during the Covid-19 pandemic).
Regulation of trustees and external asset managers 2023 signalled the end of the transition period for existing portfolio managers and trustees to operate in Switzerland without a full licence. At the start of 2023, the Financial Market Supervisory Authority (FINMA) had received just under 1,700 licence applications, with just over 1,500 of these from portfolio managers, and the remainder from trustees. As of today FINMA had granted approximately 888 licenses to portfolio managers, 43 licences to trustees and 8 licences to institutions acting as portfolio managers and trustees.
XLNC ARCHIVE| 26 October 2023