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Since 2023, Swiss external asset managers (EAMs) have been operating under the FINMA authorisation regime, following the implementation of the Financial Market Supervision Act (FINMASA) and the Financial Market Supervision Act (LSFin). This authorisation regime gives them long-awaited recognition and offers excellent prospects for external asset managers.

A buoyant but challenging environment
According to the latest statistics provided by FINMA, most asset managers and trustees authorised to date are micro-businesses, incorporated as limited companies, and employing fewer than three full-time staff. As of 31 December 2023, the total assets managed by the 1,187 authorised institutions amounted to approximately CHF 216 billion, with a further 600 authorisation applications still waiting to be processed at the end of 2023, several of which were large EAMs. 

Despite the headline numbers of EAMs, the sector faces a number of challenges that will likely affect the evolution of the industry.

Firstly, increasing and demanding regulation has been pushing up both cost, and the time spent in meeting regulatory requirements, for the past decade.

Ownership and management structures are likely to present a further challenge in the next decade, with around a third of EAMs needing to consider their futures. Competition for talent will be fierce, with candidates being courted by both external wealth management businesses and banks.
A new generation of customers is also presenting new challenges as expectations change and EAMs are forced to invest and innovate to meet their new demands.

Finally, there is a decisive next step for all licensed EAMs: the first FINMA prudential audit. In accordance with legal provisions, the frequency of this audit is determined by the risk profile assigned to each structure. While the vast majority of EAMs will clear this hurdle, FINMA's high requirements, may prompt a number of EAMs to question their independence.