YOUR MONEY MATTERS: Can You Trust a Wealth Manager Thousands of Miles Away?
“Katzensprung” is the German way of saying, “A stone’s throw”.
Since a wealth manager handles a client’s financial assets and provides investment advice, it is important for the client to trust that their wealth manager has their best interests in mind and will make decisions in line with their goals and risk tolerance. Trust is a crucial factor when establishing a relationship with a wealth manager or an investment advisor. Does distance make a difference?
Do investors feel more comfortable and confident with a local advisor with offices nearby...even if they never, or rarely, drop by the offices for a chat or grab lunch together? Does picking up the phone, having a video conference, or writing an email feel better with the knowledge that the wealth manager or investment advisor is in the same time zone?
Home-bias is understandable but...
Home-bias is the tendency for people to invest a disproportionate amount of their funds in domestic assets. It is understandable as it is what investors know in-and-out. It is a level of comfortableness that, to a certain degree, “dulls the senses”, preventing action-taking on opportunities just beyond the “comfort zone”, often resulting in an underestimation of diversification benefits and leading to suboptimal portfolio construction.
Home-bias can come at a heavy cost by missing out on opportunities for diversification and risk reduction that can be achieved by investing in foreign markets. This can result in a portfolio that is overly exposed to the risks and uncertainties of the domestic market, making it more vulnerable to market downturns. Additionally, limiting investments to the domestic market may result in a missed opportunity for higher returns, as the investor may not have access to the full range of investment options available globally. As a result, it’s important for investors to consider a well-diversified, globally-oriented investment strategy that takes into account their financial goals and risk tolerance.
“There is no tangible reason to feel uncomfortable with international and jurisdictional investment diversification and engaging a wealth manager in Switzerland thousands of miles away.”
Taking the first step towards Switzerland.
Naturally, a personal introduction, a recommendation from a trusted US advisor, a colleague, or a family member already established in Switzerland helps to break the ice. However, North American investors can take their own initiative too and get established.
Swiss wealth managers focused on providing wealth management services, specifically, discretionary and advisory investment management mandates, to US and Canadian clients, are registered with the Securities and Exchange Commission in the United States or are licensed or exempt advisors in Canada.
It’s important to diligently research and evaluate potential wealth managers, regardless of whether they are independent or affiliated with a larger financial institution, to ensure that they have the expertise, experience, and ethical standards that align with a client’s financial goals and needs.
“Ultimately, initial trust can only be established through due diligence and proper research.”
Another important step is to take a good look at the Swiss wealth manager’s website to get a touch and feel for their approach to international and especially North American clients. Trust often begins with a positive first impression. Many Swiss wealth managers travel to the US and Canada regularly and enjoy meeting personally with their business partners and clients to discuss needs, opportunities, and future developments.
Some North American investors are excited to make a trip to Switzerland to visit their chosen wealth manager at their offices and to visit the custodian bank to get a first-hand feeling of Switzerland as a second home for a portion of their assets, as well as seeing the sights and enjoying the fine dining Switzerland has to offer. A lunch in Zurich, Geneva, or Lugano with a dedicated, English-speaking, Swiss relationship manager is a nice change to a local downtown restaurant.
For both sides, the next best thing to being there is a personal conversation using today’s modern communication technologies, there are many options making Switzerland closer than ever. Local trusted advisors can also be brought on board for discussions.
Together with a Swiss wealth manager, an internationally-diversified investment portfolio can be established, complementing the home-biased portfolio back home.
The independent Swiss wealth manager.
The value of working with an independent wealth manager can include:
1. Objectivity: Independent wealth managers are not tied to any particular financial product or investment, allowing them to provide unbiased advice based on a client’s specific financial goals and risk tolerance.
2. Customized solutions: Independent wealth managers can offer customized investment solutions tailored to a client’s specific needs, rather than a one-size-fits-all approach.
3. Personalized attention: Independent wealth managers typically have smaller client bases, allowing them to provide more personalized attention and services to each client.
4. Flexibility: Independent wealth managers have the freedom to adapt their strategies as market conditions change, without the constraints of a larger financial institution.
5. Potential cost savings: Independent wealth managers usually are able to negotiate lower banking fees otherwise charged to direct clients of the bank.
In Switzerland, a Swiss bank, acting as custodian, will only take on American clients when they have a discretionary or advisory mandate with a Swiss SEC-registered investment advisor.
Not more than a phone call or click away.
Independent Swiss wealth managers can be as accessible as a phone call or click away. With technology such as video conferencing and online portals, clients can easily communicate with their wealth manager and access their accounts and investment information from anywhere, at any time - the 5,000 miles disappear.
Working with an independent wealth manager who is accessible and responsive can feel like having a trusted advisor right next door. With regular communication and easy access to their wealth manager, clients can feel confident that their financial interests are being looked after and that their wealth manager is always available to provide guidance and support. A strong, supportive relationship with a wealth manager can help clients feel more secure and empowered to make informed financial decisions, regardless of their location or circumstances.
An initial conversation will shed more light on how a client’s specific needs can be fulfilled and will strengthen the feeling of trust, despite the distance. More in-depth discussions will fortify the bond. Trust is not a given but needs to be earned and maintained.
Opening a custodian account with a Swiss bank is much the same as opening up an account in the US or Canada with the Swiss wealth manager to guide the way and simplify and monitor the process.
But 5,000 miles does make a difference!
A Swiss wealth manager, with an ingrained international upbringing and years of education, training and experience will bring different perspectives to the table. Being at least six hours in action before the North American markets open gives them a headstart. Multi-currency, internationally-diversified investment portfolios are the bread-and-butter of what they do every day, yet their efforts are specifically geared to international and North American investors. Naturally, an investment portfolio in Switzerland should complement an investment portfolio already in place back home and not compete with it. However, a globally-diversified portfolio can also include US and Canadian investments to round off the international holdings. A Swiss account also gives globally-mobile investors access to funds outside of the US and Canada.
Switzerland has an element of safety, underlined by long-term political and economic stability and neutrality, the acknowledged AAA-rated, “safe haven” quality is unmet by other countries. Switzerland is renowned for its resilience in times of crisis reflecting its comprehensive economic strength.
Swiss wealth managers and client relationship managers are also appreciated for their very personal service, discretion, reliability, preciseness, and availability, ready for a phone call outside of Swiss office hours to accommodate the North American investors’ local time zone.
A professional relationship with an independent Swiss wealth manager often evolves into something more personal and long-term...the North American client is not viewed as simply another account.
The 5,000 miles away are truly just a Katzensprung.
Publications are for your information only and are not intended as an offer, promotion, or solicitation to buy or sell any financial instrument or perform any other financial transactions. All information and opinions expressed in the publication reflect current views as of the date of publication and may be liable to change without notice.