Business Insights and Trends Driving the Swiss EAM Market in 2023 and Beyond (Simon-Kucher)

Summary

• The third edition of the External Asset Management (EAM) Market Study interviewed eight prominent banks operating in Switzerland across five key dimensions.§1
• Three banks exert control over approximately 60 percent of the total Swiss market, representing around CHF 350 billion in assets under management (AuM).§2
• For around 60 percent of participants, EAM activity is a small part of their total activity, with a low EAM AuM ratio (0 to 10 percent).§2
• Banks achieve, on average, a RoA of 45 bps, with three banks below 40 bps and two above 50 bps.§2
• Banks with less than CHF 25 billion AuM offer the complete range of services to all EAM clients, while banks above CHF 25 billion take a more structured approach.§3
• Half of the study participants do not have a dedicated EAM price list, and more than one-third proactively offer retro-free models while half still incorporate retrocessions.§4

Key insights

1. A few big players dominate both the Swiss and global EAM markets.§1
2. Custodian services, experienced front office staff and flexibility on pricing and services are the three key value drivers today.§1
3. User-friendly, high-performance digital platforms and experienced front office staff are projected to be the main future value drivers.§1
4. Banks with relatively low margins should consider bundling services, as many value-added services are still offered free or at a substantial discount.§2
5. Best practice is to offer a fully digitized service to small and low-profitability clients and a personalized service to more profitable ones.§3
6. There is a significant gap between list prices and the effective prices paid by EAMs.§4
7. The retro-free model is increasingly popular in the Swiss EAM market, offering greater cost transparency and reduced operational work.§5