Category: Blog Articles

Reading Time: 10 minutes

As a financial advisor in Switzerland, you face a major challenge: how do you acquire clients in a highly regulated market? Client acquisition requires not only professional know-how, but also strategic skill and a deep understanding of the needs of your target group.

In this article, we present effective methods for acquiring new customers that take both traditional and innovative approaches into account. After reading it, you will know how to make the most of your network, use digital channels successfully and position yourself skillfully in the Swiss financial landscape.

The most important facts at a glance

• Customer acquisition in Switzerland requires a balanced mix of traditional and digital methods of customer acquisition.
• Networking, events and presentations are proven offline strategies, while a strong online presence, SEO and social media cover the digital side.
• Cold calling is subject to strict legal regulations in Switzerland. It is better to try to convince through expertise, customer care and co.
• A clear target group definition and niche strategy will help you stand out from the competition and strengthen your personal brand image.
• Continuously measure your acquisition success, optimize your strategies and adapt flexibly to market changes in order to successfully acquire customers in the long term.

Types of customer acquisition

As a financial advisor in Switzerland, you have various options for acquiring clients. It is important to know these and use them in a targeted manner in order to successfully acquire new clients.

Offline vs. online

The classic offline methods of customer acquisition are still relevant:

• Use of personal networks
• Participation in trade fairs and congresses
• Organizing presentations and workshops
• Local advertising (print, radio)

Digital strategies are becoming increasingly important:

• Establishing a professional internet presence
• Content marketing and search engine optimization (SEO)
• Social media marketing (LinkedIn, Facebook, Instagram)
• Email marketing
• Online advertising (Google Ads, social media ads)

Forms of acquisition

The customer contacts you after becoming aware of your content/offer – this is also known as inbound marketing. This often happens through

• Recommendation from existing customers
• Findability in search engines
• interesting content on your website or in social networks

In contrast, outbound marketing involves actively approaching potential customers. This is highly regulated in Switzerland and includes

• Telephone contact
• Sending e-mails
• Direct mailings
• Personal contact at events

Legal framework conditions

In Switzerland, the regulation of cold calling has been tightened in recent years. Of particular importance are the amendments to the Telecommunications Act (TCA) and the Unfair Competition Act (UCA) of 2020.

Restrictions on cold calling

• Telephone: Cold calling is only permitted if the person contacted has given their prior consent or a business relationship exists.
• Email: Unsolicited advertising emails are only permitted if the recipient has consented or is a customer.
• SMS: The same applies to advertising by SMS.
• Letters: Direct mail is permitted unless there is a prohibition on the letterbox.

Reading tip: How do you become a financial advisor in Switzerland?

Traditional methods of customer acquisition

Despite increasing digitalization, traditional methods of customer acquisition are still relevant. They enable personal contact and the building of trust, which is particularly important in the financial sector.

The personal network is often the best starting point for customer acquisition:

• Family and friends: Let your immediate circle know about your services. Do not ask for orders directly, but ask for recommendations from people who could benefit from your expertise.
• Former colleagues and business partners: Reactivate old contacts and inform them about your new field of activity.
• Former networks: Use contacts with former fellow students or school friends.
• Local clubs and organizations: Get involved in your community to make new contacts.

Industry-specific events offer excellent networking opportunities:

• Present yourself at trade shows as a participant or exhibitor and tap into new contacts.
• Attend regular events organized by chambers of commerce or business associations.
• Use platforms/suitable event formats for cross-industry networking.

Position yourself as an expert with your own events:

• Organize lectures on current financial topics at local educational institutions or libraries.
• Offer practical training courses, e.g. on retirement provision or investment strategies.
• Combine traditional and digital methods with online seminars.
• Present yourself with an information stand at local markets or city festivals.

Use traditional media to reach your target group:

• Place advertisements or write guest articles on financial topics.
• Place advertisements in publications that your target group reads, e.g. business magazines.
• Distribute information material at strategic locations such as banks, insurance offices or local stores.
• Use local advertising space, especially in places where your target group frequently spends time.

Further ideas and methods

• Cooperation with complementary service providers: Work together with lawyers, tax consultants or estate agents and recommend each other.
• Sponsoring: Support local sports clubs or cultural events to raise your profile.
• Open day: Invite interested parties to your law firm to make your working methods transparent.
• Charity events: Organize or support charity events to show your social commitment and make new contacts.
• Customer advisory board: Set up an advisory board made up of satisfied customers who act as ambassadors for your services.

Important: With all these methods, it is important to appear authentic and value-oriented. The aim should be to convince potential customers of your expertise and build trust rather than appearing pushy. Combine these traditional approaches with digital strategies to achieve holistic and effective customer acquisition.

Digital strategies for customer acquisition

In Switzerland’s increasingly digitalized financial landscape, online strategies have become essential for financial advisors. An effective digital presence makes it possible to reach potential clients where they are looking for information and solutions. Here are the most important digital methods for client acquisition:

Create a strong online presence:

• Create a professional and user-friendly website.
• Create an informative blog with regular posts.
• Develop target group-specific landing pages.

Social media marketing plays a central role in digital customer acquisition. Use platforms such as LinkedIn for B2B contacts and professional networking, Facebook for a broader target group approach and Instagram to reach younger target groups with visual content. Don’t forget the importance of Xing in German-speaking countries. PS: Follow us!

• LinkedIn
• Instagram
• Facebook
• X

Content marketing and search engine optimization (SEO) are other key components:

• Create high-quality, relevant content that showcases your expertise.
• Optimize your content for relevant search terms.
• Build backlinks from trusted sites.
• Use different formats such as blog posts, infographics and videos.

Online advertising and automated acquisition can significantly increase your reach:

• Use Google Ads to target ads to relevant search queries.
• Use the precise targeting options of social media ads.
• Use retargeting strategies to address website visitors again.
• Automate email campaigns for effective lead nurturing.

Develop acquisition strategy & priorities

An effective acquisition strategy is the key to success for financial advisors in Switzerland. Here’s a detailed guide on how to develop and prioritize your strategy.

Think in channels

Identify the appropriate channels for your offering and target audience:

• Target group analysis: create detailed personas of your ideal customers. Take into account age, profession, income, life situation and financial goals.
• Media usage behavior: Research which media your target group prefers to use. (Examples: Young professionals: Instagram, LinkedIn, financial apps; Established business people: LinkedIn, trade magazines, business podcasts; Affluent seniors: local newspapers, trade fairs, personal networks)

Tailor your message, formats and content to each channel:

• LinkedIn: share professional articles and industry insights
• Instagram: Use visual storytelling for financial topics
• Local newspapers: Place ads or offer expert columns.

Combine different channels to achieve greater reach. Ensure a consistent message across all channels.

Master and expand acquisition strategies

Make a list of your current strengths and weaknesses in customer acquisition. And focus on improving your strongest acquisition methods first.

Develop a structured plan to learn new strategies and attend courses and workshops on sales techniques and digital marketing. Test new strategies on a small scale and analyze the results before implementing them fully.

Use your own network

Regularly provide your network with useful information and insights without selling directly. Social media and your own blog posts are excellent ways to do this.

Build up your expert status:

• Give talks at local events.
• Publish specialist articles in industry magazines.
• Share your knowledge in LinkedIn groups or local business networks.

Develop a structured program to reward existing customers for referrals . Also schedule regular meetings with key contacts without being intrusive.

Local focus

Strengthen your regional presence first before thinking bigger. Use Google My Business and optimize your profile with up-to-date information, photos and regular posts. Use local search terms on your website and create location-specific landing pages.

Local advertising can hit the spot:

• Google Ads: Use location-based ads
• Meta Ads: Target Swiss regions and cities
• Local print media: place advertisements in local newspapers

Social commitment is sometimes highly valued regionally:

• Sponsoring local sports clubs or cultural events
• Participation in community or city festivals
• Offer free financial literacy workshops in local libraries.

Local partnerships for win-win situations: Collaborating with other local businesses such as lawyers or real estate agents to provide mutual referrals.

Quality and communication

Always ensure good quality to keep your clients satisfied by strengthening your expertise through continuous training:

• Regularly attend professional conferences and seminars.
• Complete recognized certifications.
• Keep up to date with current financial trends and regulations.

Aim for industry awards and certifications. Apply for relevant awards in the financial advisory industry.

Demonstrate your successes through transparent communication.

• Publish case studies and success stories on a regular basis.
• Publish client references and testimonials on your website and social media.

Actively manage reviews without being intrusive:

• Encourage satisfied customers to leave reviews on Google, Facebook, Trustpilot or industry-specific platforms.
• Respond quickly and professionally to all reviews, including negative ones.
• Promote this subtly.

Building trust and customer loyalty

Building trust and customer loyalty are of central importance when it comes to financial topics.

Discretion and reliability form the basis for a successful customer relationship. To gain the trust of customers, it is important to demonstrate competence and integrity from the outset. During discussions, you should actively listen in order to understand the individual needs and goals of your customers. Show empathy and avoid presenting hasty solutions. Instead, develop customized proposals that are tailored to the customer’s specific situation.

Explain the advantages of your service using concrete examples and scenarios. Explain complex financial concepts in understandable language and show how your advice creates added value for the customer. Transparency is the top priority: Inform your customers clearly about possible risks and costs.

Effective communication and aftercare are crucial for long-term customer loyalty. Establish regular points of contact with your existing customers without being intrusive. A quarterly update may be appropriate, but should be tailored to individual customer preferences. Use this opportunity to provide information on relevant market developments and to review the customer’s financial strategy.

Note: Be aware of the legal framework: Unsolicited contact for advertising purposes is strictly regulated in Switzerland. Make sure that you have your customers’ consent for regular communication.

In multilingual Switzerland, it is an advantage if you can offer your services in several national languages. However, the effort and potential return must be clearly weighed up and is usually not practical for many. You should also take into account regional cultural differences in your communication, pricing, etc. What is considered appropriate in Zurich may be perceived differently in Geneva or Lugano. Sensitive and appropriate communication makes a significant contribution to building trust.

Ultimately, successful customer loyalty is based on consistency and reliability. Keeping promises, keeping appointments on time and offering high-quality advice.

Reading tip: The essential tools for financial advisors

Three tips to stand out

In the highly competitive Swiss financial advisory sector, it is important to stand out from the competition. The following three tips can help you do just that:

Tip 1: Develop a niche strategy

With a niche strategy, you position yourself as an expert for a specific target group. One example is positioning yourself as an advisor specifically for families.

• Define your target group precisely: young families, large families, patchwork families or multi-generational households.
• Analyze the specific needs of this group: retirement provision, education financing, real estate financing or intergenerational wealth transfer.

Develop tailor-made solutions and communicate them in a targeted manner. For example, offer a “family finance package” that covers the following aspects:

• Budget planning for the growing family
• Strategies for financing the children’s education
• Cover for the family in the event of illness or death
• Strategies for long-term wealth accumulation for the whole family

To set yourself apart from the competition, focus on the unique selling points of your offer. This could be special expertise in Swiss family law or innovative financial products specifically for families. Communicate your unique selling points clearly and consistently across all channels.

Build a personal brand image that reflects your expertise and your focus on families. This can include

• A family-friendly presence on social media
• Regular articles on family finance topics in local media
• Organization of family finance days or workshops for parents and children

Tip 2: Networks and collaborations

Effective networking and strategic cooperation can significantly increase your reach and credibility:

Actively participate in relevant events such as the“Swiss Finance Forum” or the meetings of the“Swiss Financial Planners Organization“. Give presentations or moderate panel discussions on your area of expertise.

Build up a network of complementary service providers. For a Family Financial Planner, these could be

• Lawyers who specialize in family law
• Real estate agents who specialize in family real estate
• Insurance experts for family insurance
• Tax advisors with expertise in family taxation

Organize joint information events or create co-branded content.

Form partnerships between experienced and young advisors. This allows you to combine traditional and modern approaches and appeal to different generations of customers.

Work together with Swiss financial influencers or local personalities. These can be well-known business journalists, successful entrepreneurs or experts on family issues. Joint webinars, podcast episodes or social media campaigns can significantly increase your reach.

Tip 3: Measure and optimize your acquisition strategy

A data-driven approach is crucial for long-term success:

Implement a robust tracking system for key metrics such as:

• Number of new customers per month
• Conversion rate from prospects to customers
• Average customer value
• Customer retention rate
• Referral rate

Use tools such as Google Analytics for your website and CRM systems for your customer management.

Conclusion and outlook

Successful customer acquisition requires a versatile and future-oriented approach. Key strategies include developing a niche specialization, building a strong digital presence, intensive networking and integrating innovative consulting formats.

A balanced mix of traditional and digital methods is crucial to appeal to different customer groups and to be able to react flexibly to market changes.
Don’t forget to nurture your existing customer base. Maintain regular contact, offer added value and continuously adapt your services to their needs.

Reading Time: 2 minutes

The tools and technologies required to start a new business can be overwhelming, even for the most experienced financial advisors. With so many options covering different aspects of a consultant’s work, where do you start?

Financial advisors need different software and tools to manage their day-to-day operations. Let’s take a look at the most commonly used software for financial advisors:

Custodian

Financial advisors need a custodian to manage their clients’ assets and execute and settle trades, but not all custodians are the same. Custodians are also referred to as depositories. When choosing a custodian, there are several important considerations: access, minimum amounts, available products, customer support, digital experiences, automation, costs, and customer experience.

Portfolio management software

A portfolio management software helps financial advisors manage client portfolios efficiently and accurately. This software allows for monitoring investments, analyzing risks, and tracking performance in real-time. Most portfolio management software also generates performance reports, which are an important tool for showing clients how their portfolios are performing over time. With this tool, advisors can discuss goals and needs throughout the course of their relationship with clients.

CRM and client portals

A CRM system is important for keeping track of clients and their progress. Such a system allows all client information to be stored centrally and accessed at any time, significantly improving the quality of advice. Through the CRM tool, the advisor can track client interactions, preferences, and historical data to provide tailored and personalized advice.

Client portal software enables clients to access their accounts, transfer funds, and view their holdings and costs. The software can vary in terms of technology and features.

Reading tip: How to become a financial advisor in Switzerland?

Compliance and document retention/archiving

Every financial advisor must comply with legal and regulatory requirements. This includes various areas such as data protection, anti-money laundering (AML), and financial reporting. One key aspect is adherence to anti-money laundering guidelines (AML), where financial advisors must ensure they know their clients (Know Your Customer, KYC) in order to detect and prevent suspicious activities.

Data protection is another essential element of compliance. In Switzerland, financial advisors must ensure that data protection regulations are adhered to in accordance with the Swiss Data Protection Act. Compliance software helps financial advisors meet these and other regulatory requirements efficiently. Such tools offer monitoring systems that identify potential risks and trigger alerts when suspicious activities are detected. Additionally, they enable comprehensive documentation and reporting.

At Everon

At Everon, we strive to make independent financial advising more efficient. We have combined many of the technologies listed here into one platform. On an intuitive, integrated platform, advisors can open accounts, manage portfolios, and create reports—at a fraction of the ever-increasing technology costs. We can help you streamline operations, reduce overhead, and improve the client experience. To schedule an appointment, contact us.

Reading Time: 7 minutes

Are you fascinated by the world of finance and would you like to help other people achieve their financial goals? The profession of financial advisor in Switzerland offers exciting opportunities, but also requires in-depth knowledge and continuous training.

Here you can find out what steps you need to take to become a financial advisor in Switzerland, what qualifications you need and what prospects are open to you.

The most important facts at a glance

• Training to become a financial advisor in Switzerland requires basic commercial training and several years of professional experience in the financial sector.
• Recognized qualifications such as “financial planner with a federal certificate” are essential for starting and continuing your career.
• Continuous further training and specialization are essential in order to be successful in this dynamic professional field.
• The legal framework, in particular the Financial Services Act (FinSA) and the Financial Institutions Act (FinIA), has a significant impact on the activities of financial advisors.
• Financial advisors can be employed or self-employed , although both models have their advantages and disadvantages.

Requirements and basic qualifications

To work as a financial advisor in Switzerland, you need a solid foundation. Basic vocational training forms the foundation.

Typically, a commercial apprenticeship with a focus on banking or a comparable qualification is required. Alternatively, a degree in economics can also provide an entry into financial consulting.

In addition to formal education, professional experience plays a decisive role. As a rule, 2-5 years of practical experience in the financial services sector is expected. This time is valuable to develop a deep understanding of financial products, market dynamics and client relationships.

The soft skills required should not be underestimated. As a financial advisor, you should have excellent communication skills to explain complex financial topics in an understandable way. Analytical thinking, integrity and the ability to build trusting relationships are equally important. In addition, resilience and a willingness for lifelong learning are essential to be successful in this dynamic professional field.

Reading tip: Private markets: New opportunities in the asset class for exclusive investments

Training paths in Switzerland

In Switzerland, there are various ways to train as a financial advisor. The “Interessengemeinschaft Ausbildung im Finanzbereich (IAF)” plays a central role in this. It offers a wide range of recognized courses and seminars tailored to the needs of the financial sector.

One common route is to qualify as a “financial planner with a federal certificate”. This title is awarded after passing a state examination and is considered a solid basis for a career in financial consulting. There are also options for specialization, such as “Certified Investment Advisor IAF” or “Certified Financial Advisor IAF”.

Higher professional examinations (HFP) are available for those seeking even more comprehensive training. These lead to titles such as “Certified Financial and Investment Expert” or “Certified Financial Analyst and Asset Manager”.

It is important to note that all these training paths must meet the legal requirements . The certifications are in line with the Financial Services Act (FinSA) and the Financial Institutions Act (FinIA), which ensures the quality and relevance of the training.

Examinations and certifications

In Switzerland, the path to becoming a financial advisor leads through state-recognized examinations. These examinations ensure that prospective advisors have the necessary knowledge and skills to provide their clients with professional advice.

The organization of these examinations is often in the hands of professional associations, educational institutions and other recognized institutions. One important player is the Interessengemeinschaft Ausbildung im Finanzbereich (IAF), which works closely with the industry to ensure practical and relevant examinations.

Interestingly, it is also possible to take exams privately in Switzerland. This can be an attractive option for career changers or people with extensive practical experience. However, it is important that the private exams meet the same high standards as the official exams.

Reading tip: Portfolio rebalancing – why it’s so important

Degrees and titles

In the Swiss financial advisory industry, there are various recognized degrees and titles that can pave the way to a successful career.

• A solid entry into the industry is the“Certified Investment Advisor IAF” title. It provides basic knowledge of asset management and investment advice and is valued by many employers.
• The “Certified Financial Advisor IAF” title goes one step further. It certifies comprehensive knowledge in all areas of financial consulting and qualifies for demanding positions in banks, insurance companies and independent consulting firms.
• A particularly prestigious qualification is the“Financial Planner with Federal Certificate“. It is awarded after a demanding federal examination and certifies in-depth knowledge of financial planning, pensions and asset management.
• There are also other relevant qualifications that enable specialization. These include, for example, the“certified finance and investment expert” or the“certified bank economist HF“.
• For internationally oriented advisors, the “Certified International Wealth Manager” (CIWM) certificate may also be of interest.

Choosing the right diploma depends on your personal career goals and interests.

Legal framework

The legal framework for financial advisors in Switzerland is largely shaped by the Financial Services Act (FinSA) and the Financial Institutions Act (FinIA). These laws are intended to strengthen investor protection and ensure the competitiveness of the Swiss financial center.

The FinSA lays down rules of conduct for financial service providers. It defines requirements for the education and training of advisors and obliges them to inform their clients transparently about the risks and costs of financial products. In addition, advisors must check the appropriateness and suitability of investments for their clients.

The FinIA regulates the licensing and supervision of financial institutions. It defines various categories of financial service providers and sets out corresponding requirements.

These laws have far-reaching implications for the activities of financial advisors and require ongoing training and compliance with strict ethical standards. Advisors must adapt their processes and documentation to meet the compliance requirements.

Although these regulations may seem challenging at first glance, they also offer opportunities. They promote the professionalization of the industry and strengthen clients’ trust in financial advice. For well-trained and ethical advisors, they can even represent a competitive advantage.

Reading tip: Saving taxes in Switzerland: optimizing investments

Types of profession and earnings

As a financial advisor in Switzerland, you have the choice between employment and self-employment. Both models have their advantages and disadvantages.

• Employed financial advisors have a fixed basic salary, social benefits and often further training opportunities. They benefit from their employer’s infrastructure and client base. However, they are bound by the company’s guidelines and products.
• Self-employed financial advisors have more freedom in their choice of products and services. They can work more flexibly and have the opportunity to earn a higher income. However, they also bear the entrepreneurial risk and have to take care of customer acquisition, administration and training themselves.

Earning potential varies depending on experience, qualifications and type of work. Here is a rough overview:

Position	Annual salary (CHF)
Entry level	60’000 – 80’000
Experienced consultant	80’000 – 120’000
Senior consultant / team leader	120’000 – 180’000
Independent consultant	80’000 – 250’000

The career prospects are varied. With increasing experience and specialization, you can advance to management positions or specialize in certain client groups or investment strategies .

Current challenges and future trends

The financial advisory industry is undergoing profound change, which is strongly characterized by the influence of the FinTech industry. Robo advisors and AI-based analysis tools are changing the way in which financial advice is provided. This development presents advisors with the challenge of adapting their services and offering added value that goes beyond automated solutions.

To be successful in this environment, financial advisors must increasingly develop digital skills. These include the confident use of financial software, the ability to interpret big data and a basic understanding of blockchain technology and cryptocurrencies. At the same time, the human element – empathy, building trust and complex problem solving – remains a decisive advantage over purely digital solutions.

Future developments in financial advice are likely to be a hybrid of human expertise and technological support . Personalized, data-based advice will gain in importance. Topics such as sustainable investing and the integration of ESG (environmental, social and governance) criteria into investment strategies will also become increasingly important.

For financial advisors, this means that lifelong learning and the ability to adapt to new technologies and market trends are essential.

Reading tip: Diversification as the key to minimizing risks in the portfolio

Practical tips for starting your career

Here are some practical tips to help you get started in the industry:

1. Networking is invaluable in the financial sector. Use industry events, specialist conferences and online platforms such as LinkedIn to make contacts. Become a member of relevant professional associations such as the Swiss Financial Analysts Association (SFAA) or the Swiss Structured Products Association (SSPA). These often offer valuable networking opportunities and access to the latest industry information.
2. Internships and trainee programs are excellent stepping stones into financial consulting. They offer practical insights into everyday working life and the opportunity to make initial contacts with potential employers. Many Swiss banks and financial service providers offer structured programs for university graduates. Take advantage of this opportunity to put your skills to the test and gain valuable experience.
3. The importance of continuing education cannot be overstated. The world of finance is constantly changing, be it through new regulations, market developments or technological innovations. Stay on the ball by regularly attending specialist seminars, reading specialist literature and keeping up to date with current trends. Many employers actively support the further training of their employees – take advantage of these opportunities.
4. Also think about specializing. Whether it’s sustainable investment, pension provision or digital asset management – a niche can help you stand out from the competition and establish yourself as an expert.
5. Ultimately, perseverance is required. The path to becoming a successful financial advisor is not always straightforward. Stay persistent, learn from setbacks and stay true to your goals. With the right attitude and continued commitment, you can build a fulfilling career in financial consulting.

Reading Time: 2 minutes

In recent years, actively managed certificates (AMCs) have gained increasing popularity. This trend is due to both the growing offerings from wealth managers and the numerous benefits that AMCs provide. In this blog post, we would like to introduce you to the main advantages of AMCs and explain how Everon can offer you diverse investment strategies with them.

What are Actively Managed Certificates?

An Actively Managed Certificate (AMC) is an investment instrument that combines the features of structured products and actively managed funds. AMCs provide a framework for various investment strategies, combining characteristics of Exchange Traded Funds (ETFs), bonds, and managed funds. An AMC represents a basket of assets and offers investors a percentage return. These certificates can be traded on secondary markets or exchanges.

Unlike ETFs, an AMC provider is not obligated to purchase the assets. AMCs are linked through contracts that serve as synthetic securities, enabling a flexible composition of assets. An AMC can invest in various asset classes, such as stocks, bonds, commodities, cryptocurrencies, and more.

The Advantages of AMCs

Low minimum investment

Actively managed certificates provide access to a wide range of underlying assets with low investment amounts. These underlying assets can include investments in private markets, funds, and many more. This allows even small investors to invest in assets that are often reserved for institutional investors.

Diversification and Flexibility

AMCs offer great variety as they enable the composition of a broad asset basket in a single certificate. Investors can benefit from wide diversification, reducing dependency on individual assets. Additionally, AMCs can be set up by Everon within three weeks, offering extra flexibility.

Liquidity


Although some assets in an AMC may be long-term and illiquid, an AMC still offers high liquidity. This is because an AMC can be sold on the secondary market, reducing illiquidity. This option makes AMCs very flexible and attractive for investors, as they can access their investment at any time. AMCs are also very transparent regarding the investment. Investors can constantly track the performance of their investment using the ISIN number.

Tradability and Cost Structure

The structure of AMCs allows for easy reallocation of the underlying assets. This means the wealth manager can quickly and efficiently respond to market changes and adjust the portfolio accordingly without the investor needing to take action. Trading costs and fees for AMCs are generally transparent and clearly defined. This makes it easier for investors to understand and plan the total costs of their investments, supporting decision-making.

Conclusion

AMCs offer a variety of advantages and have gained significant popularity in recent years, particularly due to their flexibility and diversification options. Especially for foreign investors who must pay taxes on capital gains, AMCs are attractive as they have no cross-border restrictions. Investors looking for a flexible structure will find the ideal solution in AMCs.

Are you a financial intermediary interested in setting up an AMC? Contact us

Reading Time: 10 minutes

Over 90 percent of all people want to lead a self-determined life. Personal pension planning is the key to maintaining the quality of life they are accustomed to in retirement. This applies not only to wealthy Swiss people, but to all income brackets.

In order to achieve personal goals and ensure financial security, sound financial advice is crucial at certain stages of life. So what events call for expert advice? What are the advantages of individual financial advice and what should I look out for when searching for the right expert? This article provides some initial guidance.

The most important facts in brief

• The course for wealth accumulation is set at certain stages of life
• The title of financial advisor is not protected – this makes selection difficult
• Professional financial advice is tailored to your personal situation
• Sound expert advice is not available for free
• Professional financial advice is followed by equally professional wealth management

Expert advice is particularly important in certain phases of life

Private financial planning has become very complex due to volatile markets. In certain phases of life, it is particularly important to plan your finances with foresight and sound advice.

• Entry into professional life: In addition to planning budgets, the first thing to do here is to create a reserve for unforeseen events. Furthermore, the possibilities of the three pillars of Swiss pension provision should be known and utilized.
• Professional career: Solid asset accumulation requires time. Investment strategies must be adapted to changes in income. With higher incomes, the issue of tax optimization also becomes more important.
• Starting a family: In addition to your own, you now need to plan for the protection of all family members. This includes life insurance and disability insurance. The children’s education also needs to be taken into account.
• Home ownership: Are you looking to buy your own property? Financing involves high and long-term liabilities. Once affordability has been checked, the financing concept determines how much the property will ultimately cost.
• Retirement provision: Only those who use the time until retirement efficiently will achieve the goal of financial independence in old age. This includes, for example, making optimum use of the opportunities offered by pillar 3a of the Swiss pension system.
• Retirement: Perfect asset management ensures a reliable income stream in retirement.
• Asset transfer: If necessary, optimal inheritance planning is part of comprehensive wealth management. Last but not least, this minimizes any inheritance tax.
• Divorce : Separation is one of life’s unpredictable events. It is therefore difficult to make sensible arrangements for all financial matters without outside help. In Switzerland, the division of assets normally applies, according to which the assets acquired during the marriage are divided. Pension fund contributions saved during the marriage are also divided. Furthermore, the issues of debts, insurance and inheritance law must be clarified. Overall, the financial situation needs to be completely reassessed and replanned.

What you should look out for when choosing your investment advice

Despite the serious effects of the 2008 financial crisis, the financial literacy of Europeans has hardly improved since then. According to a 2017 study by Allianz Insurance, the Swiss are among the leaders, but there are major gaps, particularly when it comes to assessing risks.

Animportant result: the efficiency of financial decisions increases with knowledge about investments and their risks. This means that qualified advice pays off. Choosing the right financial advisor is therefore vital.

Recognized educational qualification of the financial advisor as a minimum requirement

As the title of financial advisor is not protected in Switzerland, as in many other countries, customers should look out for recognized educational qualifications of their potential advisors. These are for example

• Diploma Financial Advisor IAF
• Financial planner with federal certificate
• MAS Financial Consultant

In addition to theoretical training, the advisor should of course have sufficiently proven their qualifications in practice. After all, experience in the financial sector is an important indicator of the advisor’s ability to deal with different market situations and develop individual strategies.

When selecting a suitable financial advisor, also pay attention to the following criteria:

• Independence: an independent advisor can provide objective recommendations as they are not tied to specific financial products or product providers.
• Transparency of fees: Clarify how the financial advisor is remunerated. Transparent fee structures help to avoid conflicts of interest.
• Personal advice: The advisor should respond to your individual needs and goals and offer tailor-made solutions.
• References and reputation: Find out about other clients’ experiences with the advisor and research their reputation in the industry.
• Clear communication: A competent advisor will be able to explain complex issues in a simple and understandable way so that you can make informed decisions.
• Regular review: The advisor should offer regular reviews of your portfolio to ensure that your investments continue to meet your objectives.

You should always be suspicious if the advisor makes contact with potential clients without prior inquiry. If no witnesses are allowed during the consultation, if no information is provided about possible risks, if a savings instrument is formally imposed or if blank forms are to be signed, these are signs of dubious financial advice.

Financial advice is organized differently

In Switzerland, there are various types of financial advisory services that help people plan and manage their finances. The main types are

Independent financial advisors

Independent financial advisors offer financial services and financial products from various providers. They act in the interests of their clients and are not tied to specific products or companies. They receive their remuneration either in the form of fee-based advice from clients or as commission from the product providers. As advisors normally only focus on a limited selection of product providers, customers should not take the terms independent and free too literally.

Banks and financial institutions

Banks and financial institutions also offer financial advisory services. These range from asset management and pension provision to financial advice. Customers should note that the advice may not always be independent. Alternatively, some banks offer investment advice on a fee basis.

Asset management

Asset managers offer professional asset management services. They analyze the financial situation of their clients, develop investment strategies, select investment products and continuously monitor the performance of the portfolio. Today, professional asset management is no longer reserved for very wealthy clients. Innovative start-ups have now made competent asset management accessible to a broad customer base using digital financial tools. With Everon, for example, it is possible to get started with assets as low as CHF 50,000.

Tax advice

Tax advisors offer their clients advice on optimizing their tax situation. They help them to minimize their tax burden by applying legal tax-saving strategies.

Insurance

Insurance advisors help clients find the right insurance cover for their needs. They analyze risks, recommend suitable insurance products and assist with claims handling in the event of an insurance claim. They therefore generally only cover part of their customers’ financial situation.

Reading tip: Investing money in Switzerland: investment strategies and the 1×1 of investing

The process of professional financial advice

Before you seek advice, document your financial situation in detail. This includes bank statements, information on pension accounts, investment dispositions and details of mortgages and insurance policies.

Also determine what financial and personal goals you would like to achieve and try to plan a timeframe for achieving them.

Comprehensive financial advice usually includes the following steps:

• Taking stock of the personal situation: the advisor prepares a comprehensive analysis of the client’s financial situation, including income, expenses, existing assets, debts and insurance.
• Definition of goals: The advisor talks to the client in detail about their financial goals, needs and investment objectives.
• Risk analysis: This involves determining how much risk the client is prepared to take in order to take this into account in the investment strategy.
• Financial analysis: The financial advisor prepares a personal analysis based on the parameters determined.
• Investment recommendation: Based on the information from the previous steps, the advisor will propose an investment strategy to the client that is tailored to their individual goals and risk tolerance. Depending on the structure of the investment advice, the investment strategy may already contain specific product recommendations.

Reading tip: Family office – definition, services & for whom it is worthwhile

Different remuneration models in investment advice

Remuneration models can essentially be divided into two main categories: commission-based and fee-based financial advice.

• Commission-based financial advice: In this case, the advisor refinances his services via commissions for brokered financial products. This can lead to a conflict of interest if the broker favors products with high commissions. Specific disclosure of the calculated costs (commissions) contributes to the necessary transparency.
• Fee on assets under management: If the advisor also takes on the subsequent asset management, remuneration is often based on a percentage fee of the assets. This averages around one percent and is known as a management fee.
• Fee-based advice: Here, the advisor is paid directly by the client for their services. This model can be financially worthwhile for very wealthy investors, as it offers a transparent cost structure and can reduce conflicts of interest. Unless flat rates are agreed, hourly rates of around CHF 200 are common.

When weighing up the costs and benefits, investors should consider the cost of the advice in relation to the quality of the service and the expected return.

Important: The development of private assets is largely dependent on the efficiency of the investment advice and ongoing asset management. If, for example, the possibilities of pillar 3a and the tax structuring options are used optimally, this can ultimately pay off more than any fee costs and asset management fees saved.

Reading tip: Fees when investing: Asset management, portfolio, shares, funds & co.

No financial planning without sound risk management

Risk management is an indispensable part of financial planning. It aims to identify potential risks, assess them and develop measures to reduce or eliminate them. This helps to minimize financial losses, protect the capital base and ensure long-term financial success.

Financial advisors can provide valuable support in identifying and implementing risk management strategies. They have the expertise and experience to identify, assess and prioritize risks. They can also propose customized solutions that are tailored to the client’s specific needs and objectives.

Key elements of risk management strategies include

• Diversification: one of the most basic risk mitigation strategies is to diversify the portfolio to spread risk and minimize the impact of market fluctuations.
• Insurance: The use of insurance to cover specific risks, such as occupational disability, invalidity or death, can help to limit financial losses in the event of a claim.
• Emergency fund: Setting up an emergency fund ensures that unforeseen expenses or loss of income can be managed without having to fall back on long-term savings targets or investments.
• Regular review and adjustment: Financial markets and personal circumstances are constantly changing. Regular review and adjustment of risk management strategies is therefore essential to ensure that they continue to meet needs and objectives.

Risk management is an integral part of financial planning that not only serves to minimize potential financial losses, but also helps to achieve financial goals. The support of experienced financial advisors is extremely valuable in developing and implementing effective risk management strategies.

Reading tip: Investing in volatile markets: Risk strategies for investors

From financial advice to wealth management

Investment advice and asset management are two services that differ in terms of responsibility and scope of service. These differences have an impact on the rights, obligations and liability of the service providers.

Investment advice vs. asset management

Investmentadvice offers investment proposals and advice, whereby the decision on the investment ultimately lies with the client . The advisor bears no direct responsibility for the investment decisions and their consequences.

With asset management, on the other hand, the client grants the asset manager a power of attorney to make investment decisions on their behalf and for their account. Once an investment strategy has been defined in the advisory meeting, the asset manager assumes full responsibility for the portfolio and its performance. This includes the selection, purchase and sale of investments based on the agreed strategy.

Liability and responsibility

Liability is complex in the event of “incorrect advice” in investment advice that leads to losses. In principle, responsibility for the investment decisions made lies with the client, as it is the client who makes the final decisions. However, the advisor can be held liable if there is evidence of incorrect advice or a lack of information. This applies in particular if the advice was not in line with the client’s interests.

In asset management, the asset manager bears a greater responsibility and therefore also a higher liability risk. As the manager makes independent investment decisions, he is directly responsible for the performance of the portfolio. In the event of proven misconduct or mismanagement, the asset manager can be held accountable.

Asset management: implementation of investment advice

Professional financial advice pays off if it is implemented just as professionally. First of all, appropriate financial products must be found for implementation. Once the customer has accepted the corresponding investment recommendations of their advisor, they commission the purchase of investment instruments such as shares, bonds or investment funds. If you have only taken advantage of pure investment advice, you execute the orders yourself or outsource the execution and management to another service provider – an asset management company.

By separating investment advice and asset management, customers avoid potential conflicts of interest between advisors. However, this is often not feasible in practice or is unprofitable in terms of the overall calculation due to the pricing. Performance would suffer too much as a result. Normally, this only pays off for very high assets.

Nevertheless, asset management companies such as Everon prove that there is no need to forego sound investment advice and asset management even for medium-sized assets. Everon uses digital financial tools to manage assets from as little as CHF 50,000 at reasonable fees. The fact that decent returns can be achieved with this approach is demonstrated by the awards received from the business magazine Bilanz in recent years.

Once the personal investment strategy has been implemented, the portfolio is monitored by the asset management company and continuously adjusted to the prevailing market conditions and the client’s objectives. This means that financial advice and asset management also focus on financial security when new life situations arise and recommend or take appropriate measures. Competent asset management companies are characterized by transparent reporting on performance and fees.

Reading tip: Asset management mandates: definition, importance & advantages

Conclusion

Professional financial advice is essential in certain phases of life to ensure financial goals and security. It is important to choose a qualified and experienced financial advis or who takes the customer’s individual situation and needs into account. When choosing an advisor, customers should look for officially recognized educational qualifications, independence, transparency of fees and references.

Private individuals can find easy-to-understand information on financial topics on the website of the Swiss Financial Market Supervisory Authority (FINMA). FINMA also maintains lists that warn investors of dangers on the financial market.

In addition, a sound risk management strategy is essential to minimize financial losses and ensure long-term success. For middle-income investors, wealth advice and asset management are often provided by a single service provider so that performance is not excessively burdened by fees. Qualified advisors are characterized by transparent reporting and regular portfolio reviews.

Reading Time: 10 minutes

As an investor, you are constantly faced with the challenge of exploiting opportunities for returns while at the same time reducing risk. The much-cited portfolio diversification is a crucial element here. This means that instead of putting all their eggs in one basket, investors invest in a range of different financial products and asset classes. This allows them to spread their chances of success across several pillars and achieve a stable result in the long term.

Mastering diversification is crucial to optimizing the performance and resilience of a portfolio. The strategy offsets risky or temporarily negative developments in certain investments.

Translated, diversification means “variety”. But how can the required diversity in capital allocation be implemented? To do this, it is essential to find out about the various forms, such as asset classes or regions. This article will give you an initial overview.

The most important facts in brief

• Diversification means using variety to reduce investment risks
• Spreading risk is vital for institutional and private investors alike
• Equity diversification: exploiting opportunities with acceptable risk
• Personal requirements determine the diversification strategy
• ETFs enable simple and cost-effective diversification

Diversification: definition, explanation and example

The well-known saying advises against putting all your eggs in one basket, thus emphasizing the importance of spreading risk. This concept is commonly referred to as diversification in the financial sector. Research and literature repeatedly emphasize the importance of diversified asset allocation – spreading investments across different asset classes. It is crucial for optimizing the risk-return dynamic and achieving sustainable investment success.

The main aim of diversification is to reduce risk by spreading investments across different instruments. This reduces the impact of unfavorable developments in a single investment. This basic principle is based on the idea that different assets often exhibit different and uncorrelated price movements. This also applies within the individual asset classes. Diversification in equities, for example, leads to a balanced risk/return ratio.

Correlation is therefore at the heart of diversification. This indicates how the returns of different assets or asset classes relate to each other. A positive correlation indicates that the returns move in step with each other, while a negative correlation indicates opposite movements. A portfolio with low correlations between the individual investments offers greater diversification and therefore lower risk.

Portfolio diversification and the Nobel Prize

in 1952, the American economist Harry Markowitz presented his portfolio theory, in which he set out the scientific justification and quantification of risk diversification in investments.

He determined the securities and their proportion required for an optimal portfolio in order to minimize risk without compromising the expected return. The scientist took into account the preferences of investors with regard to risk, return and liquidity.

Markowitz was awarded the Nobel Prize in Economics in 1990 for this work.

Reading tip: Investment strategy in focus: The power of the income strategy

Risk management is vital for both institutional and private investors

Diversification serves as protection against the unpredictability and volatility of the financial markets. By spreading investments across different asset classes, such as equities, bonds, real estate and commodities, investors can spread risk and minimize the impact of adverse market movements on their overall portfolio.

Diversification is also a powerful tool for optimizing risk-adjusted returns. By diversifying the portfolio, investors can potentially achieve a more favorable balance between risk and return, which optimizes the overall performance of their portfolios. This risk management approach is a cornerstone of a sound long-term investment strategy.

Diversification is not limited to a specific group of investors. The principles of diversification apply from individual investors seeking to build a secure financial future to institutional investors managing large portfolios.

• Retail investors, especially those with long-term financial goals, can benefit significantly from the protective shield of diversification. By diversifying their investments, individuals can navigate the volatility of financial markets with greater confidence. They know that their portfolios are protected against unforeseen market downturns.
• Institutional investors, such as pension funds, foundations and asset management companies, use diversification to protect the financial interests of their stakeholders. Finally, the size of institutional portfolios requires careful risk management and makes diversification an indispensable tool.

Reading tip: Investing in volatile markets: Risk strategies for investors

Portfolio diversification vs. cluster risks: These are the scenarios

To illustrate the differences between a diversified portfolio and a portfolio with bulk risk, two hypothetical investment portfolios are compared below.

Two investors have assets of CHF 500,000 and are invested in the financial market as follows:

• Investor A: The portfolio is focused on technology stocks within one geographical region.
• Investor B: The investments are spread across various asset classes (equities, bonds and commodities) and various sectors and are geographically diversified.

The potential differences in performance and risk exposure between these two portfolios are significant.

While a diversified portfolio may generate more stable and consistent returns due to its exposure to different areas of the market, a pooled portfolio may face increased volatility and potential losses if the concentrated sector or region experiences a downturn.

The following scenarios are hypothetical. However, they illustrate the different impacts.

• Scenario 1 – negative market development: In a scenario where the market plummets by 30 percent, Portfolio B’s diversified holdings can mitigate the impact, resulting in a value decline of only 10 percent. Portfolio A, on the other hand, which is subject to cluster risk, could suffer a 35% decline, highlighting the increased vulnerability of concentrated portfolios in unfavorable market conditions.
• Scenario 2 – normal market development: If the market as a whole rises by 5 percent, the diversified portfolio A can record an increase in value of 3 percent and thus benefit from the general market upswing. In contrast, Portfolio A’s concentrated exposure could lead to a 7% increase in value, boosted by the positive performance of the specific sector in which it is heavily invested.
• Scenario 3 – positive performance: If the market generally rises by 15 percent, Portfolio B’s diversified approach can lead to an 8 percent increase in value as it absorbs the general market growth. In contrast, Portfolio A’s concentration can achieve a substantial 20% increase in value as it benefits from the strong performance of its focus sector.

Understanding the opportunities and risks associated with both portfolio strategies is of paramount importance. A diversified portfolio offers stability and the potential for consistent returns. However, it can limit opportunities in the event of exceptional performance in a particular sector or region.

On the other hand, a concentrated portfolio offers the opportunity for substantial gains if the specific focus area experiences exceptional growth. However, it carries the risk of significant losses if that sector or region faces challenges.

Reading tip: Portfolio rebalancing – why it’s so important

Types of diversification in the portfolio

There are different types of diversification that investors can implement in their portfolio. These types differ in the way in which the portfolio is diversified.

First of all, diversification can be divided into three areas:

• Horizontal diversification: horizontal diversification refers to spreading the portfolio within an asset class. This means that investors invest their money in different securities within the same asset class. For example, within equity diversification, an investor can invest in shares of companies from different industries to minimize risk.
• Vertical diversification: Vertical diversification refers to spreading the portfolio across different asset classes. Investors can invest their money in different asset classes such as equities, bonds, commodities or real estate. The risk is reduced as the different asset classes usually perform differently.
• Geographical diversification: This refers to the distribution of investments across different countries. Investors invest their money in companies from different countries in order to minimize risk. In this way, they can benefit from economic developments in different countries and offset risks arising from economic problems in certain countries.

Diversification by asset class

Spreading assets across different asset classes is one of the key instruments of risk management.

The main asset classes are

• Equities: With equities, investors invest in companies. They can be divided into different categories, such as growth stocks, dividend stocks or blue chip stocks. Experience has shown that investors achieve higher returns with equities than with fixed-interest securities, although this is associated with higher risks.
• Bonds: These are debt instruments issued by governments, companies or other organizations. Investors receive regular interest payments and the capital is repaid at the end of the term. Bonds are generally less risky than shares, but offer lower returns in the long term.
• Real estate: Real estate is considered to be quite stable in value. As the investments are more difficult to liquidate, investors should already have a certain amount of financial assets before committing to real estate for a longer period of time. In addition to buying your own home, investments in REITs (real estate investment trusts) or real estate funds are a good option.
• Commodities: These include gold, silver, oil and agricultural commodities. Commodities can serve as a hedge against inflation and currency fluctuations, as their value is generally independent of the equity and bond markets.
• Alternative investments: These include hedge funds, private equity funds, works of art, collector’s items and other alternative forms of investment.

Industry and sector diversification

Sector diversification is used to offset negative developments in specific sectors.

Well-known sectors are

• Technology
• Healthcare
• Energy
• Financials
• Consumer goods
• Industry

Reading tip: Investing money in Switzerland: investment strategies and the 1×1 of investing

Risk diversification depending on investment strategy and investment horizon

In order to determine a suitable investment strategy, the investment horizon and individual risk tolerance are decisive.

• Defensive: The focus here is on preserving value or generating a secure income. This conservative strategy is aimed at investments such as fixed-interest securities or fixed-term deposits. The investment horizon tends to be short.
• Balanced: The strategy includes a balanced mix of fixed-income securities and a small proportion of high-yield investments such as equities. The aim: capital growth with manageable risk.
• Growth: The strategy is usually accompanied by a predominantly equity component. The focus is on high returns, for which higher risks are also taken.

Diversification within the asset class

Within an asset class, differentiated parameters must be taken into account for meaningful diversification. This is explained in the next two sections for the important asset classes equities and bonds.

Equities: volatility and correlation

Volatility is the standard deviation of price movements. Even a portfolio that only contains equities with high volatility can be less risky overall. This is because, with the right mix, some shares can fall sharply on one day while others rise in price. This means that a portfolio with relatively high-risk investments can increase returns and offset the risk taken with low-risk stocks.

The correlation coefficient is decisive for the relationship between securities. It ranges between -1 and 1. A correlation coefficient of -1 means that the shares move in exactly the opposite direction, with one share falling while the second rises to the same extent. A value of 1 shows that the shares behave identically and have an identical return pattern. This high correlation between the shares implies similar behavior in their movements. A value of 0 means that there is no linear correlation at all.

Shares within a sector generally have a very high correlation as they behave similarly due to their dependence on the sector. Diversification can mitigate this dependency and reduce risk by selecting stocks with a lower correlation.

Bonds: issuer risk

In the supposedly safe asset class, the risk is primarily the default of the debtor. Diversification here can mean investing in government bonds from countries with good ratings and, at the same time, increasing returns with higher risk by investing in corporate bonds.

Implement diversification simply and cheaply: ETFs

Investing individually in shares and bonds can be both time-consuming and costly. Fund companies take over this process. An equity fund that combines the largest companies in industrialized countries is a good starting point for many. ETFs that track established share indices, which in turn reflect the economic performance of a country, region or sector, are particularly cost-effective. An ETF portfolio thus enables simple and cost-effective diversification for a wide range of investors.

Reading tip: The most important Swiss equity indices at a glance

Risk minimization: opportunities and limits

Past experience has shown that in times of high market volatility, effective diversification protects portfolios from significant downturns. Asset allocation strategies tailored to clients’ risk tolerance and investment objectives have led to sustainable returns even in a difficult economic environment.

However, the principle that risk and return are fundamentally interdependent also applies here. If you try to compensate for every supposed risk, you will end up with no return. Investors must therefore be aware that systematic risk in particular can never be completely ruled out.

Systematic vs. unsystematic risk

Diversification is a powerful tool for minimizing risk. Nevertheless, there are clear limits, especially in connection with systematic and unsystematic risk. Systematic risk, also known as market risk, relates to the overall market or economy and cannot be “diversified away”. On the other hand, unsystematic risk, also known as specific risk, can be mitigated by diversification in relation to individual assets or sectors. In the case of shares, for example, this risk consists of the factors that influence the management of a company.

Reading tip: Stock market crash: stock market down – how should you react?

Implementing diversification strategies: Practical implementation

The diversification of a portfolio can only succeed if the investment strategy has been determined. This essentially depends on the investment horizon and personal risk appetite. This results in a sensible equity allocation, which should be in the context of age, assets and income.

When selecting asset classes, the main focus is initially on equities, bonds, commodities and, where appropriate, real estate. When choosing, it is advisable to invest in different sectors and regions. Exchange-traded funds give private investors very simple and cost-effective access to various asset classes and provide diversification at the same time.

Those who invest directly in individual securities take correlation and volatility into account when making their selection. A correlation analysis helps to understand the dependencies between the individual investments. Historical data is used to calculate the correlations. Suitable investments with a low correlation can be selected on the basis of this information.

Conclusion: All investors benefit from the power of diversification

In times of uncertainty and market volatility, diversification is more important than ever, even if it is increasingly challenging.

In these market conditions, it is necessary to expand into additional asset classes such as commodities, currencies, gold and digital assets. Implementing strategies that respond to market trends and market changes are added to this. The good news is that access to these options is no longer limited to large institutional investors. Innovative digital wealth advisory services enable a wide range of investors to act professionally. It is therefore important to focus on diversification, gather comprehensive information and seek expert advice where necessary.

Reading Time: 11 minutes

In recent months, interest rates have risen significantly due to strong inflation, particularly in the USA and the EU. Although Switzerland was not as strongly affected by this development, it also recorded an increase in inflation and interest rates for borrowed capital and financial investments.

Central bank interest rates have a significant impact on the financial and real estate markets. In view of these developments, it is important to know the correlations and influencing factors in the context of interest rate trends in Switzerland.

This article informs investors and borrowers about current interest rate developments in Switzerland and how they come about. Furthermore, an outlook leads to strategic recommendations for both investors and potential real estate buyers.

The most important facts in brief

• The key interest rate in Switzerland is set by the Swiss National Bank (SNB)
• Interest rates in Switzerland are low by global standards
• Savers receive interest again. Savings are losing value in real terms due to inflation
• Real estate buyers should lock in low interest rates for a long time
• Despite higher interest rates, private wealth planning requires diversification

Interest rates in Switzerland: current situation

In Switzerland, too, interest rates affect almost all parts of society: investors, borrowers and the entire economy. In each case, specific interest rates are decisive, depending on requirements.

There are basically four main types of interest rates:

1. Key interest rates: the Swiss National Bank (SNB) sets the key interest rate in Switzerland . Banks have the option of investing or borrowing money from the SNB at short notice at these conditions. The key interest rate is currently 1.75 percent (as at 18.12.2023).

Another reference interest rate is SARON (Swiss Average Rate Overnight), which has replaced LIBOR as the main reference interest rate until 2021. It is calculated daily and is based on the average interest rate of money market transactions carried out by financial institutions in Switzerland. SARON is considered a robust reference interest rate for numerous Swiss financial products and is calculated and published by SIX (Swiss Exchange). As at 15.12.2023, SARON stood at 1.70 percent.

2. Money market interest rates: This includes market interest rates for short-term deposits with terms of up to twelve months.

3. Capital market interest rates: This includes market interest rates with terms of over 12 months and up to 30 years or more.

4. Mortgage interest rates: These interest rates are subject to a similar development as money market interest rates or capital market interest rates. However, the conditions depend on other factors such as the creditworthiness of the customer, the business policy of the respective bank and its refinancing options.

In the following chapters you will find a brief explanation of the main interest rate products and forms of credit with the corresponding interest rates in Switzerland.

Savings interest

As the name suggests, a savings account is used to save capital or as a reserve. It is therefore particularly suitable for short-term investments . Savings interest rates in Switzerland vary depending on the bank and type of savings account. On average, the interest rate for Swiss savings accounts for adults is currently around 0.8 percent. Vested benefits foundations offer similar interest rates on vested benefits accounts. The interest rate level is based on the development of the key interest rate. In most cases, savings accounts are offered by banks without fees.

However, there are differences between the individual banks, which is why it is worth comparing the interest rates on savings accounts. The current range is from 0.38 percent to 1.25 percent (as at 18.12.2023). Higher interest rates are often paid on youth savings accounts. Furthermore, banks sometimes entice new customers with special conditions for new deposits.

Compared to private accounts, Swiss savings accounts generally have more restricted withdrawal conditions, which are often limited to monthly, semi-annual, quarterly or annual withdrawals. Limitations to CHF 50,000 per year are not uncommon. Depending on requirements, it is therefore advisable for investors to open several savings accounts.

Tip: More about vested benefits at Everon

Interest on medium-term notes, fixed-term deposit accounts and time deposit accounts

In Switzerland, the term fixed-term deposit normally refers to investments with a fixed interest rate for terms of up to one year. Unlike medium-term notes, they are not securities.

With medium-term notes, fixed-term deposit accounts and time deposit accounts, investors receive slightly higher guaranteed interest for their deposit during the term than is usual with savings accounts. However, the funds in these forms of investment cannot be withdrawn before the end of the term. The key interest rate also plays a decisive role in the development of fixed interest rates for certain terms. The specific interest rates are set by the Swiss banks depending on their business policy and calculation basis.

As at mid-December 2023, investors can expect interest rates of 1.2 to 1.4 percent on medium-term notes for maturities of one year and 1.5 to 1.6 percent for two-year maturities.

Interest rates for consumer loans

Private customers in Switzerland can currently obtain personal loans from around 5 percent (as at 18.12.2023). The federal government limits the maximum interest rates for consumer loans by law. In doing so, the legislator follows the development of the reference interest rate and regularly adjusts the maximum interest rates.

From January 1, 2024, the following maximum interest rates will apply to consumer loans

• Personal loans: 12 percent
• Overdrafts, installment facility: 14 percent

Mortgage interest rates

Mortgage interest rates in Switzerland vary depending on the type of mortgage, term and provider.

The main types of mortgage are

• Fixed-rate mortgages: these mortgages have a fixed interest rate for an agreed term. The interest rates for fixed-rate mortgages vary depending on the term. For example, the interest rates in Switzerland for a one-year fixed-rate mortgage in mid-December 2023 are around 1.7 percent to 2.00 percent, for a five-year fixed-rate mortgage around 1.70 percent to 2.40 percent and for a ten-year fixed-rate mortgage around 1.90 percent to 2.50 percent.
• Variable-rate mortgages: With this form of financing, the interest rate can change. Interest rates for variable-rate mortgages average around 2.8 percent in mid-December 2023.
• SARON mortgages: With this form of mortgage, the interest rate is linked to SARON. The interest rates for SARON mortgages are currently (as at 18.12.2023) between 0.60 percent and 2.9 percent.

The actual interest rates that a borrower receives depend on various factors. These include the creditworthiness of the borrower, the loan-to-value ratio of the property and the general market conditions. A comparison of interest rates between mortgage providers is therefore also necessary here.

Interest rate level: key influencing factors

The interest rate situation in Switzerland is influenced by various factors, including economic, political and market-related factors.

The factors influencing interest rates include in particular

• the foreign interest rate trend,
• the inflation rate
• the economy and
• the monetary policy of the Swiss National Bank.

Rising interest rates abroad also have an impact on interest rate trends in Switzerland. After all, Switzerland must remain attractive to foreign investors in the long term.

Inflation and deflation affect market interest rates. In the case of financial investments, a kind of risk premium is demanded in the event of high rates of price increase, as investors expect to be compensated for the expected price increase. In this respect, Switzerland continues to look good in an international comparison, so that the SNB currently sees no reason to raise key interest rates further. According to a report in the NZZ on December 14, 2023, the inflation rate in the USA was still at 3.1% in November and 2.4% in the eurozone. In Switzerland, however, it has already fallen again to 1.4%.

Economic trends also have an influence on the general interest rate level. In times of economic boom , investments increase and, as a result, the need for capital. As a result, interest rates tend to rise. The effect works in the same way when the economy is weakening and interest rates are falling.

The Swiss National Bank has a direct influence on interest rates, in particular through the key interest rate, which is used to steer monetary policy and influence the economy.

Interest rates in Switzerland: comparison with international developments

Compared to the major currency areas, Swiss interest rates are lower and less volatile.

The key interest rates of the Swiss National Bank and other major central banks in comparison (as at 18.12.2023):

• Switzerland – Swiss National Bank: 1.75 percent
• Eurozone – European Central Bank (ECB): 4.5 percent
• USA – US Federal Reserve (Fed): 5.5 percent

The central banks make their decisions based on an analysis of economic data and an assessment of the economic outlook. It is true that Switzerland was not entirely immune to negative influences such as the higher inflation rate. Overall, however, an international comparison shows that the Swiss economy is comparatively stable.

Diverse reasons for interest rate changes

Central banks make their decisions based on an analysis of economic data and an assessment of the future economic outlook.

One of the main reasons for interest rate changes is inflation. If inflation rises, the central bank can raise interest rates to reduce the money supply and curb inflation.

Interest rate changes can also occur in response to economic cycles. In times of economic upswing, the central bank can raise interest rates to prevent the economy from overheating. In times of economic slowdown, central banks will tend to lower interest rates in order to stimulate the economy.

Interest rates are also changed in response to exchange rate fluctuations. If a country’s currency becomes too strong, the central bank may raise interest rates to limit the inflow of foreign capital and stabilize the exchange rate.

It should also be noted that international interest rate changes have an indirect impact on Switzerland. For example, influencing the exchange rate has an impact on the export economy. Furthermore, an increase in interest rates abroad may result in money being withdrawn from Switzerland. And as experience shows, a slowdown in the European economy also affects Switzerland.

A look at historical interest rate trends

The State Secretariat for Economic Affairs (SECO) has initiated several research projects to gain insights into the current low interest rate environment. As part of this study, the development of interest rates, exchange rates and inflation rates from the mid-19th century to 2020 was researched.

The real interest rate in Switzerland is currently at a very low level, but this is not unusual in historical terms. The study compares the situation in Switzerland with that of its most important trading partners in a long-term perspective since the mid-19th century.

The Swiss nominal interest rate on Swiss franc bonds (maturities of five years or more) developed differently compared to other countries. In particular, interest rates in Switzerland were higher until the end of the Second World War. They were particularly high in the years before the First World War. Over the past 30 years, nominal interest rates in Switzerland have fallen continuously – even falling into negative territory after 2015. however, a countermovement began in 2023.

The real (inflation-adjusted) interest rate was stable until 1930, before falling significantly. It then remained at a low level until 1980 and then rose again until the mid-1990s, but without reaching its original level. Finally, it fell again and is currently at a historically very low level. The trend is similar abroad, albeit with some differences. It is interesting to note that the Swiss real interest rate was higher than foreign interest rates after the change in Swiss monetary policy in 2000.

Demographic developments obviously have an impact on interest rate trends. The interest rate is lower if the population has a low proportion of young people or a high proportion of pensioners.

How interest rate conditions affect consumers and the financial markets

The impact of interest rate changes on consumers depends on the consumer’s situation.

• For homeowners, interest rates increase the monthly burden. This also means that fewer people can afford to buy property.
• Saving becomes more attractive when interest rates rise. Conversely, lower interest rates can have far-reaching consequences. For example, pension plans based on interest income no longer work out.
• The use of consumer credit is dependent on interest rates. Interest rates therefore indirectly determine consumption.

The effects of interest rate changes on the financial markets are also far-reaching.

• Shares are less attractive when interest rates rise, as the yield on safe bonds is more attractive. This leads to a fall in share prices. If interest rates fall, investments in shares become attractive again and share prices rise.
• Interest rate changes have a direct impact on the bond markets. If interest rates rise, the price of bonds falls. This is because bonds with a higher interest rate are more attractive to investors than bonds with a lower interest rate. If interest rates fall, the price of bonds rises.
• Interest rate changes also have a direct impact on the foreign exchange market. If interest rates rise in a country, the currency of that country becomes more attractive to investors. This can lead to an increase in the exchange rate of this currency. If interest rates fall in a country, the currency of that country becomes less attractive to investors. This can lead to a fall in the exchange rate of this currency.

Reading tip: Portfolio rebalancing – why it is so important

What investors and real estate buyers should consider

If you keep a close eye on changes in interest rates in Switzerland, you have a wide range of opportunities to adjust your own finances accordingly.

The mortgage market

The Swiss National Bank’s (SNB) unchanged key interest rate pause has little impact on variable-rate mortgages. However, fixed mortgage conditions have already reacted to the expectation of a slightly lower key interest rate next year. Longer-term financing is now significantly cheaper than in the previous year, especially compared to SARON mortgages.

The high level of interest rates has reduced demand for real estate. The development of real estate prices could weaken further, and slight price declines are possible in 2024. However, an extreme correction seems unlikely due to the shortage of housing.

Compared to SARON mortgages, a long fixed-rate period is currently advantageous for customers whose fixed-rate period is coming to an end. Long-term fixed-rate mortgages make particular sense if borrowers expect inflation to persist and therefore have little scope for interest rate cuts. In the event of an expected economic downturn and a possible SNB interest rate cut, shorter terms are advantageous.

Investing and saving

Savers are now enjoying interest rates again. The development of savings interest rates follows the ups and downs of the key interest rate. Nevertheless, savers should keep an eye on the current inflation rate. This means that the real value of the money invested is falling at average savings interest rates.

Diversification therefore remains the advice to all investors. Depending on personal risk affinity, this means investing in investment funds, precious metals, ETFs or shares, for example. As interest rates are often higher at banks in other European countries, it is worth comparing interest rates. Important: Despite deposit protection, attention should be paid to the respective country rating.

Reading tip: Investment strategy in focus: The power of the income strategy

Outlook on the interest rate landscape in Switzerland

Interest rates have a significant impact on the strategies of the major players on the financial markets, as interest rates and equities generally tend to move in opposite directions. This is why financial experts are constantly looking at interest rate forecasts.

The SNB left the key interest rate unchanged at 1.75 percent in December. It mentioned that it would raise the key interest rate further if necessary. However, this would require a noticeable deterioration in the price outlook. The prospect of a sustained slowdown in the Swiss economy should keep price risks low in the coming year. There is therefore currently no need for the SNB to take action.

The slowdown in the Swiss economy is primarily due to the slump in global trade, which has dampened the business climate, particularly in Swiss industry. Experts assume that growth in the Swiss economy will remain below average in 2024, but will still be positive.

Factors that could influence future interest rate trends include the inflation rate, the general economic situation, currency developments and the monetary policy of the central banks. The SNB therefore monitors inflation and economic developments in order to set the key interest rate. Based on these assessments, it is expected that interest rates in Switzerland could remain stable or rise slightly over the next few years. The rapid interest rate hikes experienced since June 2022 are likely to be a thing of the past.

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In the highly complex world of financial markets, investors are looking for clear and reliable information for initial and independent orientation. The Swiss equity indices are of central importance for investors who wish to place their capital on Swiss equity markets. This applies both to long-term investment strategies and to investors who want to take advantage of short-term opportunities with equity securities on the stock exchange.

The Swiss stock exchange has several share indices, which in their entirety serve as a barometer for the country’s overall economic performance. If you understand the structure, composition and functioning of a stock index, you will already have a sound understanding of the markets. Furthermore, a Swiss equity index will give you valuable insights into the opportunities and risks associated with trading Swiss equities.

This beginner’s guide will give you a detailed overview of the most important Swiss equity indices. Each of these indices offers insights into different aspects of the Swiss economy.

The most important facts in brief

• A stock index shows the development of a defined part of the stock market.
• The selection of shares in an index serves to reflect the stock market of a country, a region, a sector or other sub-sectors.
• The stocks included in the index are weighted according to market capitalization or another defined method.
• An equity index enables investors to compare the performance of their portfolio with the comparable overall market.
• Equity indices are not tradable securities, but statistical tools.
• With ETFs, which track indices, investors invest indirectly in indices.

Share index: definition, explanation and examples

A stock index, also known as a stock market index, is a statistical measure developed to represent the performance of a specific part of the stock market or the entire stock market of a country or region. It serves as a benchmark for measuring general market performance and not for measuring the performance of individual companies.

A stock index usually has the following characteristics:

• Composition: A stock index consists of a fixed group of selected stocks that are typically chosen according to certain criteria. These criteria may include market capitalization, sector, liquidity or other factors. The selection of shares is representative of the overall market or a specific market sector.
• Weighting: Each share in the index is weighted according to its market capitalization or another defined method. This means that larger companies with higher market capitalization have a greater influence on the index than smaller ones.
• Calculation: An equity index is usually calculated by adding up the current prices of the shares included, taking into account the weighting. Changes in share prices lead to changes in the index level.
• Benchmark: Share indices often serve as benchmarks against which the performance of investment funds, portfolios or individual shares is measured. Investors use these benchmarks to assess how well their investments are performing compared to the broader market or a specific market segment.
• Historical data: Stock indices provide historical data that allows investors to analyze the performance of the market over time and identify trends. The closing levels of stocks are usually used for this purpose.

The reference point for calculating a share index is always a fixed point in time. The subsequent changes in the share index reflect the performance of the shares contained in the index. The respective level is expressed in index points.

Well-known global examples of share indices are the S&P 500 in the USA, the DAX in Germany, the Nikkei 225 in Japan and the Swiss Market Index (SMI) in Switzerland.

Swiss Market Index (SMI)

The blue-chip SMI index, the most prominent share index in Switzerland, contains the 20 largest companies from the SPI. It represents around 80 percent of the total market capitalization of the Swiss stock market. The SMI is free-float-adjusted: Only the tradable shares in the index are taken into account.

By limiting the share weightings, it is guaranteed that no single company has more than 20 percent influence on the index. The SMI therefore complies with the ESMA UCITS guidelines. It can therefore be used within the EU as a benchmark for the Swiss equity market.

The SMI is published as a price index (price index) and is listed under the name SMIC as a so-called performance index. As the SMI tracks a large part of the Swiss equity market, it serves as an underlying for a large number of financial instruments such as options, futures and ETFs.

The SMI was launched on June 30, 1988 with 1,500 points. The composition of the index is reviewed annually. The SMI is calculated in real time. This means that every trade by a company included in the SMI triggers a recalculation of the index.

The largest individual stocks in the SMI by weighting (as at 30.10.2023) are

Company	Sector	Weighting in the index
Nestlé	Nestlé Food	22.96 percent
Novartis	Pharmaceuticals	15.91 percent
Roche	Pharmacy	14.05 percent
UBS	Finance	5.83 percent
Zurich	Finance/Insurance	5.34 percent
Richemont	Luxury goods	4.54 percent
ABB	Electrical engineering	4.81 percent

Historical development of the SMI (performance)

The Swiss Market Index (SMI) was launched on June 30, 1988. Here is a summary of the historical performance of the SMI since its launch in 1988:

• Early years (1988-1990s): The SMI started at a base value of 1,500 points. It experienced moderate fluctuations in the early years, but showed an overall upward trend.
• Rise and dotcom bubble (late 1990s): In the late 1990s, the SMI experienced a significant rise, driven by a general enthusiasm for technology stocks. The index reached over 8,000 points for the first time in July 1998. This period was characterized by the so-called dotcom bubble, which eventually burst.
• Decline and recovery (early 2000s): After the dotcom bubble burst, the SMI experienced a decline and entered a consolidation phase in the following years. In the early 2000s, however, the index recovered and approached its previous highs.
• Financial crisis (2008-2009): The SMI, like many other equity indices worldwide, was hit hard during the global financial crisis. It recorded significant losses, but recovered in the years that followed.
• Developments since 2010: Since around 2010, the SMI has shown a general upward trend, with occasional corrections and fluctuations. The SMI reached its highest level to date at 12,573 points on August 18, 2021. As at 30.10.2023, the SMI stands at around 10,400 points. The SMI has performed 17.4% over the past 5 years (as at 30.10.2023).

Overall, the SMI has shown a stable performance in the past, with some fluctuations due to global and local economic events. Its history is therefore a reflection of the economic dynamism and growth of the Swiss economy.

Swiss Performance Index (SPI)

The Swiss Performance Index (SPI) includes almost all shares listed on the SIX Swiss Exchange. It is therefore also regarded as the overall market index of the Swiss equity market.

The SPI is a total return index, which means that all dividend and interest payments are included in the index and not just price gains.

The SPI was introduced in 1987 and has been on an upward trend ever since, despite some dips during the economic crises. It offers investors broad coverage of the Swiss stock market and includes a large number of companies from various sectors. The largest individual stocks include Nestlé, Roche and Novartis.

Performance over the past 5 years (as at 30.10.2023): 30.1 percent

Swiss Mid Index (SMIM)

The Swiss Mid Index (SMIM) comprises the 30 largest companies on the Swiss stock market that are not yet listed in the blue-chip SMI index. The Swiss Mid Index enables investors to track the performance of companies that are not large enough to be included in the SMI but still play a significant role in the Swiss equity market.

As with the SMI, the weighting is based on the market capitalization and turnover of the individual stocks. The SMIM was introduced in 2004 and since then has shown a mixed development, depending on the specific conditions in the respective sectors of the companies included in the index.

Performance over the past 5 years (as at 30.10.2023): – 0.6 percent

Swiss Leader Index (SLI)

The SLI Swiss Leader Index consists of the shares of the SMI and the ten largest stocks of the SMIM and thus comprises the 30 most liquid and largest stocks on the Swiss equity market. The SLI has been calculated for publication in real time since July 2, 2007.

The index was calculated back to the end of 1999 and standardized as at 30.12.1999 with an initial value of 1,000 index points. This allows it to be compared with other indices.

In contrast to other indices, the SLI limits the weightings: The four largest stocks are each limited to 9 percent. In addition, the index weighting of all other stocks is limited to 4.5 percent if required.

The SLI is an alternative to the blue-chip SMI index. The idea is that the five largest stocks in the SMI already account for a combined weighting of around 70 percent. Therefore, strong price fluctuations in these stocks have an excessively strong influence on the index value. By limiting the weighting in the SLI, the weighting of smaller stocks is increased, which better diversifies the price risk.

In addition, this limitation enables the SLI to meet regulatory requirements in Switzerland, the EU and the USA, thereby opening up new investor groups and markets. As the weighting is constantly changing, the limitation factor required for the index calculation is recalculated and adjusted every three months by the SIX Swiss Exchange.

Performance over the past 5 years (as at 30.10.2023): 16.4 percent

MSCI Switzerland

The MSCI Switzerland is an international equity index created by MSCI. It comprises a broad range of Swiss companies and is often used by international investors for investment decisions to measure the performance of the Swiss market.

The index contains the 39 largest stocks in the SPI index. This means that around 85% of Switzerland’s market capitalization (freely tradable shares) is represented. The most important stocks are Nestlé, Roche and Novartis.

The MSCI Switzerland has shown an overall positive performance in the past, even if it is influenced by global economic events, as many of the companies included in the index are heavily involved in international trade.

Performance over the past 5 years (as at 30.10.2023): 25.98 percent

Swiss All Share

The Swiss All Share Index is a comprehensive benchmark index that includes all shares in Switzerland and the Principality of Liechtenstein . Upon application, companies that are primarily listed on the SIX Swiss Exchange can also be included in the index. Furthermore, the Swiss All Share also includes stocks that cannot be included in the SPI due to the free-float limit of 20 percent.

This index thus offers investors an overall view of the Swiss equity market, irrespective of the size of the company or the sector in which it operates. The launch of the index in July 1998 was triggered by the exclusion of investment companies from the SPI. The index level of the SPI as at 30.06.1998 was adopted. The performance index was standardized at 1,000 index points.

Performance over the past 5 years (as at 30.10.2023): 30.2 percent

BX Swiss TOP 30 (BX)

The BX Swiss TOP 30 (BX) was launched by the Zurich stock exchange BX Swiss. It contains the 30 largest shares in Switzerland. The prerequisite for inclusion in the index is an average trading volume of at least CHF 7,500. In addition, at least 20 percent of the shares must be in free float and the company must be listed in Switzerland. The index is recompiled every quarter.

Performance over the past 5 years (as at 30.10.2023): 15.0 percent

Frequently asked questions (FAQ)

Are equity indices and ETFs the same thing?

An equity index and an ETF are two different things. An equity index is a measure that represents the performance of a group of shares, such as the Swiss All Share Index. An ETF, on the other hand, is an exchange-traded fund that tracks a specific index, such as a stock index.

How does an equity index work?

A share index measures the performance of a specific group of shares and summarizes the values in a group. It provides a snapshot of general market trends and allows investors to compare the performance of their portfolio with the market as a whole.

What are the advantages of investing in an equity index?

The advantage of investing in an equity index (via an ETF) is that it provides broad diversification and reduces the risk associated with investing in individual stocks. It also requires less time compared to buying individual shares directly.

What are the disadvantages of investing in a share index?

Equity indices are limited to the stocks included in the index (for example, the SMI is dominated by Nestlé, Novartis and Roche). If you are a fan of a particular sector or company, index investing could mean you miss out on the opportunity to invest specifically in these companies. Equity indices are susceptible to the general volatility of the market. Index funds and ETFs follow passive strategies and do not offer active management or adjustment of your investments in response to changing market conditions. This may mean that you do not take advantage of market opportunities or protect your portfolio in times of high volatility.