SWITZERLAND - Leading players in the Swiss institutional asset management industry have hit out at consultants exporting their manager-of-manager models into Switzerland.
The current debate in Switzerland stems from the launch of the country’s first manager-of-manager products by UBS Global Asset Management late last year. UBS is soon to be joined by Swiss Life.
But the Swiss have been looking to markets such as the UK and Australia where consultants have been heavily criticised for selling investment products directly.
Dr Franz Schumacher, partner of Swiss consulting firm PPCmetrics, said: Our strategy as a company is quite clear. We do not want to be, or go into, the manager-of-manager direction as Mercer or Russell is doing [in the UK].
We value our independence very highly, he added. It is a basic decision that you make - whether you want to be a consultant or an asset manager ... It may be that over the shorter term we could make a lot of money [from selling manager-of-managers] but we believe that over the longer term the clients will appreciate our independence.
Zurich-based Sven Ebeling, senior consultant at Ecofin Investment Consulting, noted: We have thought about offering manager-of-managers, but we came to the conclusion that you have to draw a line between these two types of services. Either you are in the asset management business or you are in the consulting business.
There is a certain conflict of interest and you cannot avoid it, he added. We are following what is going on in the UK but in Switzerland there is definitely the perception that there is a conflict of interest.
Stephan Thaler, director of marketing at Swiss Life Asset Management in Zurich, said: In our opinion we see the Swiss consultants, contrary to what seems to happen in the UK, would rather focus on their core consultant role as independent and neutral advisors and not become suppliers, which could possibly bring them in potential conflict of interests.
Although the first BVG (second pillar) product on the Swiss market came from UBS Global Asset Management in partnership with consulting firm PPCmetrics (see page 37 for more details), PPCmetrics was keen to point out that it deliberately does not want to offer a manager-of-manager product itself.
We are not creating a product. We help in the selection and composition [of the UBS product], said Schumacher. If any such project would question our independence we would rather terminate it.
Other captains of the Swiss pensions industry have also come out strongly against consultants offering manager-of-manager services in Switzerland.
“I do not think that the consultants will be going into the manager-of-manager area,” said Alex Orus, managing director of State Street Global Advisors in Switzerland. I think they will stay independent. I do not think the Swiss market would accept it and I do not see it taking off here.”
Michele Porro, managing director of Credit Suisse Asset Management, said: “We have regular meetings with consultants and being independent is very important.”
Dr Udo von Werne, head of business development Switzerland at Pictet Asset Management, noted: “I do not see this happening in Switzerland as most of the consultants are aware that it is a very delicate route between becoming on the one hand an asset manager and on the other trying to be an independent and unbiased consultant.”
One industry source pointed to consulting and manager-of-manager firm Frank Russell as an example. It closed its Zollikon (near Zurich) office in the late 1990s but the firm has now decided to have another stab at Switzerland, opening a new office in Geneva earlier this year.
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