At WHVP, our journey as a Swiss-based SEC licensed wealth management firm has been an illuminating one. Specializing in providing bespoke financial solutions to individuals with U.S. connections for over thrity years, we have encountered a fair share of surprise and skepticism surrounding our niche clientele. Questions often arise about why we concentrate on U.S. clients, with some assuming that the offshore landscape may have lost its allure.
Today, we are excited to present a comprehensive report that delves deep into the U.S. offshore wealth management industry in Switzerland. Through this insightful analysis, we aim to showcase the myriad of future-oriented businesses that await those Americans who recognize the benefits of offshore banking. But before we head into it, let's first look at why Swiss-based companies choose to register with the SEC and when this step becomes necessary.
Why do Swiss-Based Wealth Managers Register with the SEC?
Swiss-based wealth managers register with the U.S. Securities and Exchange Commission (SEC) to gain access to U.S. clients, expand their business, and comply with U.S. regulations. SEC registration establishes credibility and trust, enabling cross-border collaboration and attracting U.S. investors seeking reputable financial advisors. It also ensures compliance with U.S. reporting requirements, fostering transparency and accountability to U.S. clients and regulators. By tapping into the vast U.S. market, Swiss wealth managers position themselves as global players in the offshore wealth management industry, opening doors to new opportunities for growth and success.
When is a Registration Necessary?
Under the Dodd-Frank Act, an exemption allows wealth managers to manage up to $25 million in assets and serve up to 15 clients in the U.S. without requiring SEC registration. However, once a wealth manager's business expands beyond these thresholds, an SEC registration becomes necessary.
The Swiss Offshore Wealth Management Industry
Join us as we unveil crucial insights into the U.S. offshore wealth management industry in Switzerland. The report, based on publicly available data from the Investment Adviser Public Disclosure website, offers a detailed examination of the sector, shedding light on pertinent trends and statistics.
Independent Registered Investment Advisors
Among the 61 Swiss investment advisors licensed with the SEC, 59 have filed their ADV brochures this year. Since the yearly filling is a legal requirement, we have taken the two companies that didn't file out of the statistical analysis, assuming they are not actively pursuing the market anymore. Four companies are not managing any money at all and nine companies with a license manage non-U.S. assets but zero U.S. assets. This leaves us with 46 companies that comply with the SEC's rule and manage U.S. moneys. Out of those, nine are private banks that hold an SEC license. This leaves us with 37 independent asset managers that hold an SEC license.
Dominance of U.S. Assets
SEC registered investment advisors primarily manage U.S. assets, accounting for approximately 67% of their total AuM on average. However, the bandwith is very wide. The lowest percentage of U.S. money lays at 1.01% and the highest percentage of U.S. money lays at 100%.
SEC Licensed Companies in Switzerland
Swiss-based SEC licensed companies collectively manage an impressive $22.7 billion of U.S. connected money, with $8.9 billion invested by independent asset managers after removing the private banks that hold licenses.
Low SEC Licensing Among Swiss Wealth Managers
Despite an estimated 1,500 Swiss Financial Market Supervisory Authority (FINMA) licensed wealth managers in Switzerland, only 3.9% of them are licensed with the SEC.
Distribution of SEC Licensed Companies in Different Regions
Switzerland has more to offer than just Zurich and Geneva! Swiss based SEC registered investment advisors are found in all parts of the country - in 15 different cities to be exact. When we divide them into the main geographical regions, we find the following: 38 companies are in the German-speaking part, 19 in the French-speaking part, and two in the Italian-speaking part.
Asset Management Statistics of Independent Advisors
The median assets under management (AuM) per SEC licensed independent asset manager is $147.5 million, while the average AUM reaches $241.7 million. On average, these companies oversee 108 accounts, 73 with discretionary mandates and 35 with non-discretionary mandates. The median account size stands at $3.6 million.
Issuance of New Licenses since 1992
The number of new licenses remained relatively low and stable over the years, with just one license issued per year in most instances. However, there were a few exceptional years, such as 2009, which saw two new licenses issued, and 2012, when five new licenses were granted. The highest number of new licenses issued during this timeframe occurred in 2016, with ten new licenses, followed by seven new licenses in both 2011 and 2014.
Limited Growth in SEC Registrations
The report reveals that in the past five years there has been only one new registration due to the SEC suspending the issuance of new licenses to Swiss companies at the end of 2018. This suspension stems from a disagreement between the Federal Data Protection and Information Commissioner (FDPIC) and the SEC over the permissibility of data transfer by certain Swiss financial firms. The FDPIC's most recent commentary from August 2021 can be found here. For the time being this creates a significant barrier to entry for new firms that would like to enter the U.S. market and pushes for collaborations with asset managers that hold the license already. While it is likely, that this dispute will be resolved at some point, the time frame is currently unclear.
Gender Representation in the Industry
A staggering 69% of all SEC registered investment advisors have no female owners or executives, while 22% have less than 5% female representation. Only 2% have less between 5% and 10% representation, and a mere 7% have more than 10% women at the highest level.
Switzerland's Global Position
Among all registered investment advisors outside the U.S., Switzerland ranks fourth with 37 companies. The top three countries are the UK with 283 companies, Canada with 137 companies, and Hong Kong with 73 companies. Singapore follows closely with 44 companies.
As we conclude this exploration, one thing becomes abundantly clear: the U.S. offshore wealth management industry in Switzerland is far from losing its allure. WHVP's unwavering dedication to its niche clientele is a testament to the untapped potential that lies within this dynamic sector. By recognizing the significance of the U.S. offshore business and embracing the opportunities it offers, both investors and financial institutions can chart a course towards prosperity and success. At WHVP, we remain committed to navigating this landscape with innovation, integrity, and a firm belief in the bright future that awaits those who dare to venture into the U.S. offshore domain.
Note: The data and statistics presented in this press release are based on publicly available information from the Investment Adviser Public Disclosure website as of December 31, 2022. Please verify the data before publication, and ensure compliance with any regulations regarding the disclosure of financial information.
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