Inhalt

How can external asset managers continue to be entrepreneurial?

Tougher regulations, changing clientele, technological innovation and complex financial markets are all increasing the challenges facing External Asset Managers (EAMs). If the strength of EAMs lies in their independence, this does not mean they must go it alone - quite the contrary. Collaborating with strong partners can help them maintain their entrepreneurial freedom.

 

Di Laurent Pellet
Partner del gruppo Lombard Odier e responsabile dei Gestori patrimoniali esterni

 

"The time when a banker could leave a bank on Tuesday and launch an external asset management business on Wednesday are over," Philipp Fischer, Founding Partner of Oberson Abels SA in Geneva, reminded us during a recent event with Lombard Odier. It is an understatement to say that the profession has become considerably more complex in recent years. EAMs are still one of the pillars of the Swiss financial centre, and an undeniable asset for our sector that must be preserved.

But how can we stimulate this entrepreneurship? Given that there is often a gap of several months between the time a manager leaves a bank and the time they begin work for an existing external asset management company or launch their own business, this is an increasingly difficult path to follow.

Furthermore, Philipp Fischer expects the consolidation of EAMs to increase in the coming months, in terms of both business combinations and the launch of shared service platforms. These mergers, which have long been marginal, will enable EAMs to continue to undertake new ventures, better serve their clients, improve their performance and prepare for the future of their business, or even its succession.

 

Focus on core business through strong partners

However, mergers and acquisitions are not the only options. Strong partners that EAMs can count on to focus on their core business are an undeniable asset. Beyond the much-discussed regulatory agenda, the WealthBriefing Swiss External Asset Management Awards in Zurich recently showed just how much EAMs are looking for strong partners - especially after two years of global pandemic and at a moment when the geopolitical landscape has changed dramatically, with significant consequences for the financial markets.

For more than 30 years, services to external asset managers have been an important and strategic activity for Lombard Odier, with more than 70 employees working for EAMs and multi-family offices today. We believe that wealth managers must retain their independence and entrepreneurial freedom, but that they should not work alone. As partners, we do not limit ourselves to providing a single service, but offer a range of solutions and support tailored to the needs of each EAM, so that they can focus on their client relationships and management.

 

Supporting transformation

EAMs want to be able to rely on a bank's strong balance sheet. Especially during periods of turbulence or paradigm shifts, as they are currently experiencing with the requirements of the Federal Financial Services Act (FinSA) and the Federal Financial Institutions Act (FinIA).

This new regulatory landscape is a game-changer for many companies, pushing them to specialise and partner with other organisations to manage costs. As a reminder, EAMs and trustees must apply for a licence from FINMA by the end of 2022.

The financial market supervisor, FINMA, has argued that to some extent the regulations should actually boost the sector in the long term. The prospect of new laws has highlighted the status of EAMs as an industry in its own right. More than 2,000 EAMs and several hundred trustees have declared themselves according to the new rules. While there will certainly be a few obstacles along the way, we will continue to support our clients and partners in this crucial transition phase for them and for the future of their businesses.

 

Preparing for the future and digitalising processes

Beyond the purely legal aspects, EAMs often need support to adapt to the digitalisation of work processes. This allows them to effectively manage various investments, client reporting tasks, compliance aspects and outsource non-essential functions so that they can make the most of their specialist skills. Again, experienced partners in this area can help them achieve their goals.

“Each EAM must consider which business model they wish to construct in order to ensure the longevity of their activity,” said Fischer. In terms of digitalisation, new solutions are increasingly needed to ensure efficient client onboarding, reporting, risk management, investment adequacy monitoring and other functions. These are all areas in which we are constantly investing, thanks to our banking platform, which has been developed over more than 30 years, and our strategic partnerships with fintechs.

 

Biography

Laurent Pellet joined Lombard Odier in June 2017 and assumed responsibility for the Group’s External Asset Managers department in 2018.

He began his career with Ferrier Lullin, where he held various positions for more than 15 years, including Head of Credit and Risk, and then Head of the External Asset Managers department in 1997. In 2006, he joined Julius Baer to lead their External Asset Managers business for French-speaking Switzerland and Western Europe. In 2012, his responsibilities were extended to cover Monaco and the Middle East.

Laurent Pellet holds a Federal Diploma (school leaving certificate) from the Ecole Supérieure de Commerce de Genève. He is a graduate in Credit and Risk Management from the University of Geneva, and in Quantitative Portfolio Management from HEC Geneva. He also holds the ‘International Certificate of Private Banking and Wealth Management Retreat’ from the Swiss Finance Institute, and is a Certified Wealth Management Advisor (CWMA).