SWITZERLAND - A bitter conflict of interest debate has broken out in the Swiss market with some investment consultants standing accused of accepting payments to put asset managers on long lists and in some cases, even shortlists.
Industry sources in Switzerland are claiming that some consultants demand CHF10,000-30,000 (e6,500-19,500) to place asset managers on long lists, while rates for specialist studies for managers, such as “how to improve your product offering”, are as high as CHF100,000.
One source, speaking on the condition of anonymity, said: “Some of these consultants are considered to be the door openers in Switzerland for foreign asset managers. To get on to their long list, they charge around CHF10,000. They also provide studies to asset managers for around CHF100,000 with the implicit understanding that an asset manager will get a place on the long list.
Asset managers hope that they will stay on the radar screen of consultants if they buy these kinds of studies. But the biggest problem is that the investors don’t know any of this – nobody’s declaring who is doing what for whom.”
Another source noted: “We do see some cases where a particular consultant has been working for a particular bank on some project and a few months later that bank is on the shortlist. These are some relationships that are very, very questionable.”
PPCmetrics, one of the biggest consultants in Switzerland, said: “Basically, there is always a potential conflict of interest when a consultant works for many banks, other financial institutions, asset managers and institutional investors. We are aware of this fact and have taken measures to ensure that all our clients get neutral, unbiased and objective advice from us.”
Franz Schumacher, a partner at the firm, added: “When we accept mandates there is never a correlation between services provided and long or short listing. And to put it clearly, we would never tolerate such connections between the two – implicitly or explicitly. We would rather refuse a mandate.”
Michael Brandenberger, COO at Swiss consultant Complementa, said that it does not accept payments to place managers on long lists or short lists and denied any potential conflict in banks and other asset managers sponsoring its annual pension fund survey.
Meanwhile, Ecofin, which provides an electronically run database for asset managers, charges managers on a yearly basis to get onto the database.
Martin Janssen, managing director at Ecofin, said: “Managers have to pay around CHF1,000 as yearly fees for remaining on the database. But this is hardly a secret; we state this publicly on our website. We generate an income of around CHF230,000 from all the managers and we use the money to run the database.”
Global investment consultants, Watson Wyatt and Mercer InvestmentConsulting in Switzerland, also deny accepting payments from managersto place them on long lists or shortlists.
Beat Zaugg, investment practice leader at Watson Wyatt in Zurich, said: “All our manager research meetings for inclusion in the database or recommendations for shortlists are absolutely free. Even if managers have in the past paid to belong to Global Asset Study, that has never had any influence on manager selection.
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