Pressure on margins
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Wealth management margins have been under continuous pressure for two decades, which largely explains the consolidation of the sector. Several factors contribute to this.
Fee transparency, imposed by regulation and demanded by clients, makes comparisons easier and pushes prices down. Institutional clients and large fortunes negotiate tight terms.
Competition has intensified. The large universal banks, foreign banks, independent asset managers, online banks and digital platforms offer wealth management services at a range of prices. Low-cost index funds have reduced the perceived value of active management.
The end of banking secrecy removed part of the value that clients attached to Swiss service. A client who had not declared his assets in his own country or paid his taxes might accept high fees in return for discretion, whereas a client whose assets are declared compares Swiss fees with those of his country of residence.
Fixed compliance and technology costs have increased, reducing the net margin even where the gross margin holds up.
The fall in interest rates over a long period reduced the interest margin, an important source of revenue for institutions that grant Lombard loans and pay little on deposits.
| Pressure factor | Effect on profitability |
|---|---|
| Fee transparency | decline in management and custody fees |
| Increased competition | pressure on prices, client acquisition costs |
| End of banking secrecy | disappearance of the discretion premium |
| Fixed compliance and technology costs | rise in the cost-income ratio of small institutions |
| Low interest rates | reduction in the interest margin |
Caution. Pressure on margins strikes small institutions first, since their fixed costs cannot be spread over sufficient assets. The consolidation of the Geneva sector is the direct consequence of this logic, which continues to operate.
For general information only. This article does not constitute legal or tax advice, does not replace advice on an individual case and creates no lawyer-client relationship. It reflects the legal position as of October 2026.