An idea is being floated as to how unlicensed managers can keep operating after the Finma's deadline expires.
Time is tight. By the end of the year, about 2,500 independent asset managers need to have a Finma supervisory license in hand. The application takes roughly six months. That means that anyone who has not applied by the end of June is unlikely to make it.
«We can only extend the deadline in isolated cases,» Philip Hinsen, who is responsible for the matter at Finma, recently told finews.com.
Hundreds Giving Up
Only one of every ten independent asset managers has received a license. There is a sense of building panic. Many of them have decided to do away with the stress altogether and give up. Given the increased effort that a Finma license and the corresponding supervision entails, about 400 institutes will stop their activities by the end of the year. Liquidation or sales seem to be the only alternatives to a license.
Or is something else out there? Market observers say there is an idea out there making the rounds to keep the smaller players going without a Finma license. They reinvent themselves as independent client advisors. Under Swiss regulation, they would have to enter their names in an official advisory registry, which requires them to pass a qualifying examination.
Retro or Not
There are three Finma-approved registries in the entire country although they do not fall under the regulator's prudential supervisory umbrella. The way it might go is that clients give their newly independent «advisor» a mandate for their bank depot. Any buying and selling would be on an execution-only basis at the bank.
If the advisor and the client agree not to deduct any retrocessions, that would open the door to a far wider selection of funds, and far more than the execution-only ones available at most banks, which are mostly limited to exchange-traded funds, or ETFs.
Major Headache for Banks
The idea is not all that far-fetched when looking abroad. In the UK there are now tens of thousands of advisors under the Institute of Financial Accountants (IFA). But the banks here are standing in the way. Many of them are refusing to acknowledge the status of the independent client advisor and they do not want to give execution-only clients any kind of special status, particularly if they are getting advice outside the bank.
That is not least because they are trying to prop up their revenues and fees with advisory mandates and discretionary products. «The law does provide for advisor status but this will be a dead-end for anyone independent», an observer knowledgeable with the matter told finews.com.
Tender Shoots
Finma is not going to press banks to open a market niche for independent client advisors. The regulator does not feel it is responsible for advisors as they come under its supervision. When pressed by finews.com, they said it was up to the banks as to what companies and individuals they want to do business with. «Finma has no legal basis to force institutes into specific types of business,» a spokesperson indicated.
«That is going to prevent the tender shoots from growing,» the same observer indicates.
