LSFIN. The new law should lead to a professionalization of the sector. An evolution expected by Jean-Sylvain Perrig, founder of Premyss
Leila Ueberschlag
The Swiss Financial Services Act (LSFin), which is expected to come into force in late 2019 - early 2020, will subject financial providers to a number of new obligations. "The new regulation now requires financial intermediaries who manage securities portfolios on behalf of third parties to formalize and document their investment policy," explains Jean-Sylvain Perrig, founder of the Geneva-based performance consulting firm and external CIO Premyss.
A strict framework
"For a small private bank, an independent asset manager or a family office, it is a question of setting up the governance that will allow to obtain homogeneous quality performances in relation with the risk budgets defined with each client. This is what Premyss offers, and to our knowledge we are the only ones in Switzerland to offer such a consultancy service."
Prior to founding his company in June 2017, he was head of investments at Edmond de Rothschild Private Bank as well as Union Bancaire Privée (UBP) and has more than 25 years of experience managing private client portfolios. "These legislative changes are forcing the industry to become more professional. Financial intermediaries will have to organize their governance internally, in order to have unified and consistent practices, so that everyone works with the same principles and in the same context," he stresses. "Management, even if it is personalized, will now have to fit within a strict framework."
Premyss' mission, in such a context, is to enable its clients to define and implement a governance and investment policy. Its services are aimed at asset managers, private banks and pension funds. "We offer two different service lines: a governance implementation of the investment policy - with a follow-up at each step of the implementation - as well as a portfolio expertise service, in order to know if the results of a management are aligned with the defined objectives and if they are in line with the investment policy."
He takes a positive view of the legislative changes underway: "A quasi-institutional approach to management is becoming increasingly important. Increased transparency is good for everyone: clients and financial intermediaries alike," he says. "Without going too far, it is normal that rules are established when you manage hundreds of portfolios. You have to deliver value to clients, but you don't deliver it by spinning portfolios unnecessarily in order to collect commissions on transactions and by over-representing in-house products or well-margined structured products, as happens when governance is not good," he stresses. "Performance becomes a commodity. It has to be quality, but it is not why foreign clients come to Switzerland."
In the current practice, he regrets a lack of initiative and creativity: "We need to be more proactive in the client relationship, to understand his needs and to offer him extended services, using external specialists if necessary," he comments. "Services that the customer will agree to pay for. We need to find new sources of revenue, because revenues from portfolio management will continue to decline. In an ecosystem like Switzerland's - with strong institutions and excellent specialists available - there are many opportunities."
Optimistic about the future
While he believes that the Swiss financial center will evolve well, it will take time. "It is difficult to change a business model that is more than 50 years old. Before, we were in an industry where information was compartmentalized and that is in the midst of a major upheaval. The scope of activity and the way we communicate will change. If we can achieve these two things, I think we can be optimistic about the future of private banking in Switzerland."
