Lately, several commentators have suggested that Switzerland’s dominance in global wealth management, particularly in Asia, is fading. But is this narrative accurate?
It is certainly the case that, in little over a decade, competition between wealth management jurisdictions has evolved from a one-way street to a four-lane highway. According to McKinsey, Asia Pacific accounted for 57% of global GDP growth between 2015 and 2021 and many clients in that region who have accumulated wealth have chosen to hold their assets at or closer to home for cultural and practical reasons. Consequently, the gap between assets under management in Switzerland and assets held in the Asian hubs has narrowed dramatically, with Boston Consulting Group (BCG) numbers showing Switzerland, where USD 2.6 trillion is held, just ahead of Hong Kong and its USD 2.4 trillion.
But whilst this asset “near-shoring” trend undoubtedly spells more competition for the Swiss financial centre and for international banks, it is not to be seen as an existential threat. Swiss banks retain their brand equity and continue to manage around a third of the total assets of Asia’s 20 largest private banks, according to Asian Private Banker.
Additionally, 80% of the heads of Asia’s leading regional wealth managers gained experience at Swiss banks earlier in their careers.
And given clients’ evolving needs in an increasingly complex world, there’s every chance that Swiss banks’ meaningful role in advising Asia’s wealth creators will expand further. There are four major drivers on which they can capitalise.
Multi-banked clients
First, demand for private wealth advice in Asia is growing and whilst it is true that clients in Asia tend to be more hands-on than their European peers, like elsewhere they are fundamentally looking for safe custody and robust performance at a competitive price. Most clients are multi-banked and welcome the opportunity to work with an advisor who provides global investment solutions combining Swiss resilience and local market expertise.
Second, as a generation of Asian entrepreneurs reach retirement age, a major transfer of wealth looms – USD 2.5 trillion by 2030 according to WealthX. From reinvesting excess capital in their businesses, many Asian entrepreneurs today are sensitised to the benefits of capital protection, wealth planning and global asset allocation, expertise that has long been the mainstay of Swiss private banking.
Third, strength and stability matters. At bank level, capital, liquidity and net stable funding ratios are now being closely scrutinised. At country level, the complexities of US–China relations mean clients are keenly watching the delicate balance of geopolitics. This also means that they are more open to diversifying assets across multiple financial centres, including Switzerland, and banks that manage such complexities efficiently have a clear advantage.
A joint approach to winning business
Fourth, larger clients are spoilt for choice and competition is fierce. They are being actively courted not only by banks but also by financial centres. From Hong Kong and Singapore’s family office schemes to Dubai’s Golden Visa programme, financial centres are adopting a joint government–industry approach to winning new business. All financial centres need to be in the game and those that are proactive will capture market share. There is perhaps even scope for like-minded, tech-savvy financial centres such as Switzerland’s to mutualise standards, attracting the good actors and repelling the bad.
To conclude, Swiss banks continue to play an influential role in advising wealthy, and in particular Asian, clients. In today’s world, the qualities on which Switzerland has built a century-old successful financial centre are becoming more – not less – relevant. While Switzerland faces strong competition, its long-standing reputation for stability, investment expertise and excellence in wealth management remains highly relevant – perhaps more so than ever.
