Switzerland is called the launching pad for products such as wealth management and private banking. Currently, Swiss banks offer them in different formats. Wealth management can be an option within the private banking services, or can be offered as a completely separate service.
If you want to provide this kind of service and get a banking license in Switzerland, find out more about the features of this sector in this country in our material.
Wealth management and private banking
We need to differentiate these two types of services. Wealth management is often equated with private banking, as their essence is to effectively preserve and increase customer capital.
At the same time, there is a difference - private banking services are provided directly by the bank. Thus, private banking provides an individual approach to customer requests, preferential loan terms, privileged service by a personal banker. The main product of such consultations is within the wealth management service, which can be provided not only by banks but also by specialized companies.
Swiss law relating to private banking and wealth management includes a number of instruments that are applied differently depending on the type of activity. The most tightly regulated transactions include securities transactions (including brokerage), as well as banking services.
In Switzerland, it is mandatory for banks to get licensed with FINMA (Swiss Financial Markets Authority). This is a financial market surveillance service that is a government agency, and primarily aimed at protecting the investors, creditors and policyholders, who are guaranteed equal rights, and ensuring a worthy reputation.
Thus, FINMA indirectly contributes to the competitiveness of the financial sector in Switzerland. Since FINMA is funded by companies that control it, the service is completely independent. The guarantor of the organization’s independence is its structure, which employs about 350 people. Among them there are specialists in law, economics, mathematics, auditing, accounting, investment, actuarial activities.
Types of banks in Switzerland
Retail banks provide retail banking services. Anyone can open a bank account in a retail bank, for example, to receive their salary, pay utility bills, etc.
Commercial bank provides banking services to enterprises and business entities. A commercial bank usually provides loans to companies and manages accounts from which salaries are paid or to which sales proceeds are received.
The private bank specializes in complex banking and investment services for (very) wealthy individuals, and in planning a strategy for managing their wealth.
Swiss private banks in brief
The activity of modern private banks in Switzerland is based on a specific ownership structure. Unlike private joint-stock bank, partners who manage a private bank risk everything with their fortunes, and perhaps that is one of the reasons why money owners are more willing to entrust the management of their capital to private banks.
Private banks in Switzerland also manage the accounts of their wealthy clientele in such structures as international holding companies, trusts, funds, limited partnerships.
Private-banking services in Switzerland are very expensive. As a rule, it is a question of some percent of a transaction.
Private banks mainly offer their services to wealthy clients, the so-called Ultra High Net Worth Individuals.
The owners of these banks are fully responsible to the client with all their property.
How to obtain a bank license in Switzerland?
Financial institutions that intend to provide private banking services in Switzerland, as well as intermediary firms conducting transactions with investors' assets must get authorized and licensed with FINMA. Another option is to apply for a bank license in Switzerland with a self-regulatory financial institution (SRO).
Obtaining a banking license in Switzerland takes quite a long time - up to 9 months from the date of application.
It should be noted that the regulator strictly monitors the private banks’ activities and may revoke a banking license if the bank has violated any regulatory provisions of Swiss law.
Attention to detail
For effective private banking, it is not enough just to analyze financial flows, it is important to understand what affects them.
Proper attention to many factors is the key to financial well-being. To preserve and increase capital, it is important to work with professionals in the field of protection and administration of business, tax optimization, tax planning, drafting and maintenance of contracts, and, of course, legal support of your business.
If you intend to register a wealth management company in Switzerland, you can get comprehensive legal advice in the field of investments in Switzerland from IQ Decision UK lawyers. Do not hesitate to order an individual legal consultation on issues related to bank licensing in Switzerland.