Swiss Life has made a surprising push into money management. Now, the largest life insurer in Switzerland is targeting wealthier clients – with advantages that banking rivals can only dream of.
Swiss Life's Paul Weibel (pictured below) freely admits that the insurer can't compete with banks purely on the basis of advisory services. That hasn't stopped the Swiss firm from launching ambitious plans to lure wealthy clients.
The success of Swiss Life under former bond trader Patrick Frost bears out the strategy: its asset management arm manages 60 billion Swiss francs from third parties, roughly 2 billion francs of which on behalf of private clients.
Demand for Mandates
That doesn't sound like much in the billion-franc stakes of asset management and private banking. But it is where Weibel, who runs Swiss Life's business with private clients, sees opportunities. The insurer began offering two highly-standardized solutions over a year ago: an discretionary mandate and one which clients select more than half of their portfolio themselves.
The 290 million francs that Swiss Life manages in the two strategies is small fry. However, 30 percent of net new money is from existing investments or reinvesting insurance proceeds – each. Normally, just 15 percent of Swiss Life's clients reinvest with the firm.
A full 90 percent of the existing clients chose discretionary mandates, in which Swiss Life has a free hand over investment decisions – a rate that banks, which are trying to lure wealthy clients into discretionary deals, can only dream of.
1 Million Clients
Swiss Life's biggest advantage is that insurers don't have to abandon retrocessions, or income from asset manager kickbacks. Why? Because insurers have always followed the advice model. The insurer's more than 500 distributors in Switzerland are building on that expertise.
«We're good at helping clients with their pension planning. From there, it's a short journey to investing,» says Weibel. With 1 million clients in occupational and private pension schemes, Swiss Life has enormous potential to tap.
The expansion isn't an added bonus for Swiss Life: the insurer faces a shortfall between its policy payout obligations and record-low and negative benchmark interest rates, and one which it can't quite compensate with its own investment income. This conundrum has brought other business areas like investing into far sharper focus.
Beyond Pensions
Swiss Life is beginning to challenge private banks in their traditional feeding ground. Affluent clients, for example, which the insurer wants to sell discretionary mandates to, Weibel said on Thursday. The affluent segment already makes for roughly 10 percent of investment clients.
The group is largely congruent with the over-65 age group which Swiss Life is also targeting. Baby boomers want more than simply a pension, a trend that Swiss Life has been savvy at exploiting. The insurer has expanded its offering beyond life and care insurance to include pension planning, or offerings for healthcare and senior housing.
