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Switzerland's Private Clients Gain More Access to Overseas Funds

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BERNE, Switzerland (–Switzerland’s high-net-worth individuals–defined as those with at least 5 million Swiss francs ($3.8 million) invested in financial instruments–are to enjoy “qualified relationships” with their banks and fund managers beginning April 1 this year.

In a directive issued earlier this month, the Swiss Federal Banking Commission, Switzerland’s financial services regulator, extended the Collective Investment Act of March 8, which places the wealthy private clients of financial advisers and banks into the same category as institutional investors.

Under the new directive, banks and securities dealers can now advise wealthy clients on investments in unlicensed non-domestic instruments. The condition of what is known as a “qualified relationship” is that there is a written agreement between institution and client.

“Previously banks couldn’t propose unlicensed products to these clients,” said Tanja Kocher, head of communications at the SFBC. “The need to protect individual investors was perceived as higher than that of institutional investors.” Ms. Kocher said that the SFBC realized new rules might be needed from its conversations with banks and investment advisers and that, once the need was identified, the directive, or circular, was passed “quickly.”

Apart from cheering bankers and advisers, the circular also is good news for non-domestic funds looking to sell their wares among Switzerland’s wealthy. Private clients will no longer have to request specific funds by name if they want exposure to unlicensed non-domestic funds. Investment advisers with a number of high-net-worth clients are likely looking to broaden their portfolio of non-domestic offerings.

“The new regime will open out a number of possibilities, especially for the bigger distributors of mutual fund products,” suggested John Lowry, executive chairman of the Geneva-based hedge fund advisory firm Tara Capital. “It’s something that private banks in particular have been awaiting for years.”

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Contact Bob Keane with questions or comments at [email protected].


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