Martin Straub, Envisage Wealth Management Services
Automatic information exchange of client financial data under the US Foreign Account Tax Compliance Act (Facta) and the OECD’s Common Reporting Standard (CRS) is now a reality.
Information is already flowing under Facta and will start to flow under CRS in September 2017. These two unprecedented invasions of personal privacy now remove any remaining illusion of client confidentiality or privacy.
One might think this sounds the death knell for Switzerland’s financial sector, whose business model was basically hiding people’s money from prying, often kleptocratic governments and charging a premium for that service, commonly estimated at around 1.75% per annum on assets.
However, responding to shock therapy, Switzerland is rising to the challenge as so often in its 500-year history. After leading the way in regularising accounts, the industry is adapting, innovating and adjusting.
We see a vital industry further fragmenting – in a good way – into ever-smaller, more numerous, more nimble, highly focused specialists. Meanwhile, banks are driven by regulatory and compliance pressure to consolidate into pure ‘commodity service’ providers.
The main client needs remain the same: tax optimisation (saving, deferral, reduction), asset protection (major and growing), investment flexibility (invest in what you want), and inheritance and succession planning.
The game will be won through service quality. Switzerland’s strength lies in providing value to clients. Finding ways to protect clients wherever legally possible from governments intent on squeezing every drop, while at the same time giving governments what they want.
Providers who deliver on their promises and get service delivery right will profit enormously. Switzerland looks to be doing just that, reinventing part of itself yet again.