Interview with Oliver Hohermuth, Director
Why is the US market still attractive for Swiss banks?
After the implementation of the FATCA regulation in 2010, Swiss banks have been under pressure and in fear of US clients. Many chose to part ways with their US clients, closing accounts without offering alternative solutions. But some smaller banks are still finding opportunities in this key UHNWI market. What is their approach?
Based on global wealth reports, North America is the region with the highest average wealth in the world (34.7%). The market has grown 18% in the past three years and the US population of UHNWI is the largest worldwide, with more than 2,000 individuals representing approximately USD 3.3 trillion making it a “paradise” for independent advisors registered and regulated by the SEC.
Swiss banks are still attractive for foreigners as Switzerland is one of the most successful, reliable and stable economies in the world. Swiss banks have a cachet because of the "culture of confidentiality" that is part of the national character; however they face fierce international competition.
A handful of Swiss banking institutions have started to re-engage with the US market, complying within new regulations. Consequently, their assets under management are seeing spectacular increases. Since Switzerland was the first country the US decided to focus its tax evasion efforts on, its banks have gained an edge on their competitors.
Recent data provided by the Swiss National Bank shows that Switzerland remains the leading player in the global cross-border private banking markets. The volume of assets held by individuals with Swiss banks has seen growth over the past few years reaching approximately CHF 3,000 billion foreign custody assets by the end of 2014.
Institutional investors (CHF 2,362 billion; e.g. funds, trusts, asset managers, pension funds) are as well substantially increasing their assets held in Switzerland. While most developed countries are fighting high unemployment and high budget deficits, Switzerland is standing out as a rare example of solidity and safety.
How do Swiss financial advisors attract international wealthy clients, particularly from the US?
If a financial advisor wants to be part of the ongoing growth story in the US, it first has to target US tax compliant clients, being either US citizens residents or non-residents in the US. Reyl Overseas Ltd with its SEC license started serving US clients in 2011, a significant advantage that has been at the basis of its expansion in the last few years and is showing promising growth.
Secondly a financial advisor has to offer added-value international investment solutions seeking portfolio diversification by leveraging on the expertise in the international markets, especially in Asia and Europe, and on in-house research. US asset managers are traditionally home-biased and while they have products focusing on emerging markets and Europe, they tend to find more comfort in investing in USD in the US equity. The US regulator also limits certain types of investments for US domiciled investors, for example holding physical gold or other precious metals.
Geographic diversification, as well as currency diversification, is the key to success with US clients. It is also important to have a global service offering from advisory portfolio management to discretionary portfolio management, plus estate planning and patrimonial analysis.
What is key for a boutique Swiss bank when developing a US clientele?
US citizens face challenging tax matters, as they are taxed on their worldwide income. With a SEC Registered Investment Advisory license required in most US states, the investment expertise to handle the regulatory requirements in the United States relevant for the clients is mandatory.
Since 2011, Reyl Overseas Ltd has been set up to respond to the needs of US nationals and taxpayers living in Switzerland and abroad. As a Swiss company, it is ideally placed to offer clients the REYL Group’s asset management products, investment advice and international wealth management expertise.
Despite the lack of name recognition in the US, Reyl Group differentiates itself from other bigger players not only because it has strong entrepreneurial DNA but also because it is a family owned business bank. The group expertise and defined presence all over Europe and in Asia is also a key advantage. Passing successfully since 2002 from one generation to the next, the bank has experienced organic growth, vertically focused on entrepreneurial values and strong anglo-saxon management spirit. It matches perfectly with the US mentality and the US way of developing business.
Reyl Overseas Ltd decided to open its first US branch in order to be closer to its client base in the US.
Reyl Overseas Ltd aims to grow organically through its existing client network and with the support of its business partners. It has a unique business model, in line with the hands-on personalized approach characterized by the Group, it offers US client’s multidimensional value-added services that go beyond Wealth Management. It also benefits from the groups offering Corporate Advisory & Structuring Services (merger & acquisition, capital & debt raising, capital restructuring & optimization, corporate debt structuring, etc.), Corporate & Family Governance (succession & estate planning, family governance, cost optimization, concierge services, etc.) and Asset Custodian Offering dedicated to institutional clients (IT, operations, legal advice, management & research, etc.). Finally the successful track record of RAM Active Investments, its family of funds, will also help to diversify the offering to its entrepreneurial clients, in finding solutions in various areas of wealth management.
Simply an evidence to keep working with US clients!
Most of the Swiss banks have stopped their activities within North American territories, the US citizen has been left out without any international advice. As we already mentioned, the United States is home to the largest population of billionaires worldwide: 69,560 UHNWI*. The American economy is a large and very attractive microcosm of entrepreneurs who want to extend their business and banking relations internationally. Foreign investors are also willing to establish or strengthen their activities in the United States.
With its capacity to incorporate the entrepreneurial dimension of its clients, and its extensive experience in merchant banking, Reyl Group which targets international entrepreneurs since several years ensures a full range of services supplementing wealth management activities. Adding to that a strong anglo-saxon culture and strong knowledge of the business in Europe, Asia and Middle East, REYL is positioned to replace the bigger players that turned their back on this market.
Beyond the FATCA fear, Swiss private banks can still bring a lot to tax compliant US clients: stability of its economy, stability of its monetary environment, quality of management, excellence of services, culture of discretion, entrepreneurial spirit. Such qualities that we hope will persist despite all kind of pressures.
*defined with at least USD 30 million in net assets.
About REYL Overseas Ltd
Founded in October 2011, REYL Overseas Ltd is a company under Swiss law regulated by the Swiss Financial Market Supervisory Authority (FINMA) for all aspects relating to the Swiss Money Laundering Act, registered as an Investment Advisor with the Securities and Exchange Commission (SEC).
➨ Get in touch with Oliver Hohermuth for further information and an initial conversation
Reyl Overseas Ltd.
Talstrasse 65, 8001 Zurich, Switzerland
T: +41 58 717 94 00 F: +41 58 717 94 01
333 Lee Parkway, Suite 626, Dallas, TX 75219, USA
T: (214) 665-9426 F: (214) 665-9590
Minimum amount of investment:
Our team combines first-hand knowledge of U.S. and international markets, providing financial expertise and exceptional personal service with a refreshingly innovative, flexible and transparent approach.
Oliver E. Hohermuth - Director
I have over 10 years of experience in the banking and wealth management industry. I started my career at the Swiss Union of Raiffeisenbanks before joining Credit Suisse Private Banking Switzerland. In 2009, I became an SEC-registered investment adviser and broker/dealer representative for Credit Suisse Private Advisors in Zurich and headed the firm’s brokerage desk for US clients. From 2010 until 2015 I worked as an investment adviser for a Swiss SEC RIA out of Switzerland and relocated to Dallas, Texas, to run the firm’s first onshore office in the United States.