Stefan Bichsel has been a pillar of asset management in Switzerland. At the start of 2021, he left the head of BCV’s Asset Management and his role as a member of the Group’s General Management
How do you see the future of asset management in Switzerland, and what will be its biggest challenges in continuing to make Switzerland a financial center that stands out again?
Swiss players in asset management must know how to be useful and provide themselves with the means to achieve excellence. You have to be better than international competition and not just national competition because, like the law, asset management no longer has borders. Swiss asset management can succeed in repositioning itself in force if its ambition is to optimize its offer rather than its income. You have to be able to show customers the possible impacts of their choice.
Swiss asset management can successfully reposition itself if its ambition is to optimize its offer rather than its income
The disease of the time was to prioritize appearance communication. If the content is weak, it is just enough to create a positive perception but will not be able to last, because nowadays everything compares. We must strengthen ourselves by setting ourselves higher ambitions than elsewhere, for example helping the client to calibrate his ESG ambition, use all the new technologies and knowledge at our disposal and free up time to build a quality relationship with clients.
We are fortunate to have a strong starting point with significant volumes under management. This allows us to finance our evolution. We must not forget that our asset management market is atypical, with a very important international side and a domestic side which is just as much.
We are good at producing financial products and achieving successful results. We are excellent at handling high net worth international clients with sophisticated heritage. We need to stay connected internationally while not neglecting Swiss clients, private and institutional, focusing on the engine that drives it all, the solid asset management processes and the compelling returns that come with it.
Very quickly during my studies, I realized that law was, at the time, a geographically limited activity, and this convinced me to continue my studies in the United States. Understanding the two systems of law broadened my horizon and gave me a very valuable advantage. Knowing how to interact with Anglo-Saxon lawyers is essential when you want to evolve in the financial sector. If you understand their procedures and speak their language, you will more easily get what you need, avoiding being drowned in extensive documentation cleverly prepared by very expensive teams.
You were president of EFAMA (European Fund and Asset Management Association) and the current AMAS (Asset Management Association Switzerland, formerly SFAMA), what did you do for the industry?
The investment fund is regulated to protect the unitholder (or investor), who often does not realize it. This is also why the job of fund management is carried out in a legal entity separate from that of management, and its duty is to defend the interests of investors at all times.
In Switzerland, under my chairmanship, we have introduced the code of conduct for fund managers. Not necessarily popular with everyone, these rules have certainly contributed to the fact that there have been no notable accidents in Swiss funds. Our code later served as a model at European level – nice recognition.
By over-regulating investment funds, we in Switzerland and Europe had reached the absurd situation where unregulated or less regulated financial products, made up of the same assets but without protection, were easier to sell to clients than funds.
After very active lobbying in Brussels, we obtained that the same rules are applied to all investment products intended for private clients.
This has been the hot topic of the past decades and, to keep it so, we, the financial industry and the education sector, have clearly not done enough. But it also depends on the image one has of the investor, either an adult capable of forming an opinion on the basis of relevant information, or an individual in constant need of protection. Personally, I agree with the first model. Then there is the choice between the requirement of relevant or complete information. Lawmakers have opted for full disclosure, which has resulted in a plethora of documents and increased production costs overall, but not necessarily clarity. Finally, new generations are arriving and their way of obtaining information is contemporary, financial products are more and more complex and the access channels are multiple.
Either way, we must have the ambition to use language and leaflets that are understandable to all.
First remember that we are at the service of customers. We are not here to indulge each other with entrusted money or to lead academic crusades. As a priority you have to focus on the customer, then show discipline or rigor, if you prefer. Thinking about doing well is not enough and having another idea every day is downright performance poison. In the real estate industry, it is customary to say “location, location, location”. In asset management, the rule is simple: “discipline, discipline, discipline”. I love a competent and complementary team approach based on a clear and transparent process rather than believing in a system that promotes individuals to star status. In the firmament of our profession, fixed stars are much rarer than shooting stars.
How do you respond to people who think passive management works better than active management?
With passive management, it’s never a disaster, but never an achievement. Doing only passive management, which has its merits, means giving up taking responsibility for an effort to beat the indices. It is certainly not easy but nevertheless possible and one of the great satisfactions of this profession.
What aspects of asset management do you find most profitable over the long term for institutional investors or for private and retail investors, and why?
It will sound trivial, but after nearly forty years in this industry, I haven’t seen better over time than a good balanced mandate, for both an institutional and private client. Having diversified investments, allocated in a reasonable way, while remaining invested over the long term are the foundations of good management. This again gives me the opportunity to recommend the use of investment funds, which lend themselves to this and, it must be remembered, are the only financial products fully regulated in the interest of investors.
You raise a crucial point. Switzerland should not invent its own standards, but first integrate widely recognized international standards and aim to demonstrate the quality of our expertise in relation to them. Then we can go further in the application or development of certain standards, in particular ESG. I think that our financial center has an important and credible role to play in this last area, but for that we must (finally) occupy the field, lead the debates in an international context and become a more demanding leader in ESG investment management. . Fortunately, initiatives in this direction are underway.
As I have mentioned several times, it is above all necessary to focus on customers and a good understanding of their needs and expectations; be careful, because it is not necessarily the same. Without satisfied customers, there are no assets to manage. Generations change, their needs and wishes change. We really have to grasp these changes as quickly as possible, because the new generations are very well informed and are more demanding. The context has changed quite a bit. I want to talk again about ESG type investments. This is why we will have to offer real ESG products whose criteria will be demanding, measurable and measured, and understood by customers.
2009-2020: 11 years at Banque Cantonale Vaudoise, Managing Director of the Asset Management & Trading division, and member of the Group’s General Management
Various positions held in major financial groups since 1982, including several positions as a member of the general management