Family offices in Switzerland enjoy a favorable location to operate, and with an ever-changing economy and rapid advances in technology, they will need high-level services to run most efficiently.
As the number of family offices globally continues to rise, Switzerland is a preferred location for wealthy families to set up shop.
There are an estimated 70 single family offices and 400 multi-family offices in the Alpine nation, and those numbers are only expected to grow.
One of the most expensive places in the world to live, Switzerland offers a degree of exclusivity and privacy not afforded in many other countries.
Switzerland holds the world’s number one ranking on the Human Development Index, strongly performing across all metrics in education, safety, health care, infrastructure, and governance.
Swiss private banking has a long history, and the country’s financial markets are well-established.
Additionally, tax rates are relatively low, and the Swiss cantons compete to attract foreign assets by keeping those rates down.
Switzerland’s financial regulatory environment is one of the world’s best.
Globally, Switzerland ranked 7th in a study that considered financial regulation, transparency, and compliance matters.
And according to US News “Open for Business” Rankings, Switzerland is ranked #1.
The 2023 UBS Global Family Office Report revealed many interesting characteristics about Switzerland’s family offices.
According to respondents:
Also according to UBS:
Family offices in Switzerland are doing all the right things by having diversified investment portfolios, but with increased investments comes increased complexity.
Managing reports and performance becomes challenging with data spread across multiple custodians, portals, and emails.
Not to mention, managing the internal family affairs requires a lot of attention: succession planning, establishing trusts, distributing assets, and lifestyle management.
In addition, there are considerations for philanthropy/charitable giving, handling taxes, and risk mitigation/insurance.
Ultimately, it takes a team: accountants, lawyers, bankers, tax advisors, investment managers, estate planners, middle- and back-office staff, among other needed specialists.
While many wealthy families invest in technology for their portfolios, they have been slower to invest in new technology and digital solutions for their internal operations.
Family offices in Switzerland are no exception.
They still rely on manual, paper-driven and Excel-heavy processes that are increasingly inefficient with the passing of time.
And they are ideal targets for cybersecurity criminals who seek to exploit vulnerabilities in a family office’s technology infrastructure.
Upgrading technology should be a point of focus to eliminate these inefficiencies and threats.
Younger generations are increasingly engaging with older family members when it comes to modernization efforts.
And family office leaders should take their engagement seriously.
Implementing new technology makes succession planning a smoother process.
When everyone is using new, cloud-based platforms, it’s easier for the family to be on the same page. When the older leadership transitions out and the next generation comes in, they can make sure nothing slips through the cracks in that transition. The new, younger leaders will lead the family office more effectively with a proper setup:
Portfolio accounting platforms, trading and risk management systems, accounting and tax software, CRM systems…
Furthermore, the proper systems in place will reduce security risks.
“Everything’s widening so much that many family offices simply can’t provide all the services that HNW families and individuals need so increasingly - as the research shows – they need support from third parties.”
Swiss family offices have a lot gain from outsourcing. Leveraging third parties is part of a broader trend as single- and multi-family offices grow in complexity and need greater expertise.
According to a survey of family office professionals, roughly 83% of respondents predicting an increase in outsourcing say that family offices want more specialized services.
71% of family offices say that outsourcing will enable them to improve overall service levels while 59% say it allows them to focus on their core strengths.
When it comes to the middle and back office, family offices increasingly leverage the outsourced model, and Empaxis helps them streamline and digitize their workflows.
As mentioned above, many family offices in Switzerland are caught up in paper-heavy and Excel-driven processes.
And the same is true in the UK and throughout the EU.
The time and money spent on these tasks adds up over time, and with rapid advances in technology, there is no reason for single- and multi-family offices not to adapt.
Data management, reporting, analyzing, risk mitigation, and investment decision making… these are some of the activities that can be improved with upgrades in technology.
Collectively, these automation and AI tools will ultimately free up family office staff to focus on activities that deliver greater long-term value, scaling operations and reducing costs.
The overwhelming majority of Swiss family offices have alternative investments in their portfolios, including private equity.
Private equity processing is a very manual task, with downloading statements and storing the files in required locations. After that, it’s a very manual copy-paste of data points into spreadsheets.
Family offices can have all those workflows automated, and Empaxis makes it happen for them.
Family offices in Switzerland are indeed growing, as the country is an attractive place for wealthy families to reside and operate.
And as family offices grow and the technology, regulatory, and investment landscape evolves, they will need a range of services to meet their growing needs.
Leveraging third parties (outsourcing) as well as adopting new technology, be it cloud-based systems, artificial intelligence, or robotic process automation (RPA), will be the ways for family offices to maximize their operating efficiency.
Empaxis stands ready to support Switzerland’s family offices as they seek a more streamlined and efficient operation, allowing them to enjoy the full benefits of digital transformation.