Fund Management - Assignment Example

Fund Management There are many components of fund management that characterize financial marketing, banking and other business operations. These include wealth management, hedge funds, private banking, retail investment banks and sovereign wealth funds. These forms of management are particular for a particular country, and determine the economic success of the country. For example, Switzerland has a fantastic economic growth rate per year due to its noteworthy private banking which is renowned around the world. My discussion will dwell on wealth management and private banking. I will use Switzerland as my model country (Barber 97). Wealth Management Wealth management is part of a business enterprise’s financial aspect. It denotes the careful utilization of resources of a company for the purpose of maximizing output and generating profits continuously. It constitutes financial advice and tax services at one fee. Estate planning can be a component of wealth management. These services can only be offered by financial institutions such as banks and brokerage firms. Trust companies also specialize in wealth management. Based on an individual’s financial goals and objectives, wealth management is a way of investing assets and planning of one’s estate (Anastasios 17). Private banking is used interchangeably with wealth management because wealth management can be viewed as a form of private banking. Private banking means that the financial services offered are not determined by public rules and regulations. It is the owners who formulate and regulate the rules that concern their financial services. Some institutions are now offer wealth management lessons because it has become a key aspect of modern day banking. This aspect is the future for modern day banking. We are noticing the creation of microfinance corporations around the world. This is an indication of the importance it is playing in many economies around the world (David 28). Wealth Management and Private Banking Switzerland For a long time, Switzerland has become the world’s number one destination for investors from all walks of life. This has made the country amass a lot of wealth in the services rendered. The country is one of the most stable economic nations of Europe. To add to its increasing tourist attraction sites, Switzerland’s fortunes are really in a meteoric rise. The major factor that has contributed to this is the country’s policy of neutrality and the fact that many languages are spoken in the country. This has attracted many investors. The degree of neutrality means that the Swiss banks have a policy of not investigating funds deposited regardless of the source of the funds. Unlike other European banks whereby any money deposited has to be vetted to determine the source, this is not the case with Switzerland (Douglas 15). It is no doubt, therefore, that even corrupt leaders from third world countries all run to deposit the money in Swiss banks knowing that none of their dirty will be investigated to determine the source. Since historical times, private banking has been a success in Switzerland. Formerly, investors with a high net wealth worth &1 million were allowed to invest in the banks. However, a change has now occurred which has allowed even the common man to invest in the Swiss banks. Even though this continues to take place, the Swiss private banking sector keeps targeting high ranking investors around the world. These investors in turn prefer to keep their wealth in this country. Wealth management and private banking in Switzerland is a sector that has undergone enormous growth in the 5 years that have passed or so. This is due to initiatives that have been undertaken by the Swiss banking sector. Today the sector stands as one of the best in Europe (Hans 142). There has been a change in the legislative laws of Switzerland that have done away with the traditional system of health management and private banking. This change started occurring about ten years ago. It was a brilliant initiative which led to the rise in the banking standard. One such legislation is the reduction of over taxation. This has offered many prominent and rich personalities low tax rates which are favorable for their businesses. Even non-Swiss citizens benefit from the low taxes. From sports personalities to business magnates, many are flocking to Switzerland to have a taste of the banking. This is the reverse in the other European countries where over taxation is a common occurrence. For example in German and France, the tax is over 45% for any money amounting to over 250000 Euro. This is even higher in countries such as Norway, Sweden, Denmark and Finland. In these Scandinavian countries, the social systems are markedly expensive. The taxation amounts to over 50% in a number of cases. No high profile investors are, therefore, willing to invest in the private banking sectors of such countries; the conditions have scared away potential investors (John 48). Apart from Europe, countries like Canada and USA are overtaxing citizens and any investors. In Canada, for example, the taxation rate is over 42% annually. These conditions in the other countries have increased wealth management and private banking Switzerland. The government policy is the paramount change that has contributed to the success in wealth management. Another change that has occurred in the last five years or so that have boosted wealth management in Switzerland is the creation of smaller banking that are tasked with servicing smaller investors. Formerly, the banking sector targeted high ranking individuals with a high net income for investing. This was a choosy trait that was a form of prejudice to the smaller earning individuals. Over the years, this has changed over time. Currently, the banking sector has become flexible in the accepting of customers for investing. One does not have to be a millionaire or a billionaire in order to save in the banks. Small to midsized Swiss banks are being started in the country. Unlike the multibillion accounts, these allow anyone to invest between $ 50000 and $300000 and open private accounts. This has reaped benefits because there has been an increase in retail businesspersons who are saving in the banks. However little, the investments are proving to be a vital ingredient of the Swiss economy (Marczell 28). A number of Swiss private have been set up as a result, therefore, the banks have an efficient mode of wealth planning. This efficacy help the banking management realize accountability and also draft noteworthy accounts for the clients. There are a number of services that the banks offer. From bank accounts and asset management of many years back, the bank has developed a variety of other services that keep attracting investors. These include Islamic banking, asset protection and retirement planning. The banks also have started offering investment solutions to the clientele. The ideas of venture capital and trust formation have further contributed to an increased rate of banking by local and even foreign investors. Even though the banking sector has introduced banking for retail business persons and other low earning citizens, it still continues to deal with individual with a high net income. Moreover, Swiss banking Account opening is now an online venture. One can, therefore, open an account in a matter of seconds. The advent of Internet banking over the last 5 years has contributed to the success. Furthermore, the banking management has improved its communication with the clientele. This is another difference in the fund management between the Swiss banks and other banks around Europe. For example, a worker in one of the banks introduces the services of the banks through a telephone conversation at a free cost. The worker will ensure the customer understands all details concerning wealth management and banking. They even offer to meet the customers at any convenient time and place. They are even willing to meet one at their home depending on the wishes of the customer. This changing approach has drawn massive crowds. The customers feel wanted by the banks, hence, their desire to want to invest in the banks (Masson 47). Another change that has occurred over the last five years or so in Switzerland is the condition that all banks must maintain secrecy of all the banking operations. This especially involves trivial matters like divorce settlements and inheritance disputes. It, however, rules out criminal disputes. It is further interesting to note that tax evasion in Switzerland is not a criminal offence. Instead the authorities regard it as a political issue. Factors that have contributed to positive changes in wealth management in Switzerland For one, the strategic location of Switzerland in Europe has contributed to the preference by many European investors to invest in the banks. Hence, the people from the British Isles and the Scandinavian countries all bring their resources to central Europe in Switzerland. This increasing customer base has increased the progression of wealth management in Switzerland. Were it peripherally located, it would be a different story altogether. For an investor who is from Southern Europe, it becomes easier to invest in the centrally located nation than move further up to the banks in the Northern stable economies. The geographical location has, therefore, played a major role in the positive change of fund management in Switzerland. Switzerland’s policy of neutrality has further ensured that the banking sector continues to receive all types of investors. Unlike other countries that have to investigate the source of foreign currencies, Switzerland takes another approach. Even corrupt leaders from African countries invest in Swiss banks knowing that none of their activities will be investigated. This has, however, contributed to the culture of impunity in the countries of origin of the money from corrupt and unjust means. This is the far that it goes. Whatever the source, the private banks in Switzerland continue to prosper and increase in resources. It is even interesting that fraud in Switzerland is not considered as a criminal issue. It is regarded as a political issue. Social factors also play a role in the fund management in Switzerland. The hospitality of the Swiss has further contributed to the increased investment in the Swiss banks. The Swiss are hospitable, courteous and caring people. The crime rates in Switzerland stands as among the least in the world. Such traits of the people reassure any investors. They have no fear whatsoever when they are investing. When foreigners are welcomed well in a country, they become encouraged to undertake many development projects and invest more. Social norms like racism do are not found in Switzerland. As compared to other European countries, Switzerland has the highest number of citizens from other countries. They welcome these people to their country and treat them well. This may appear minor, but it is a very important factor in modern day banking. In Russia for example, the degree of racism is very high. This has scared away investors from many continents. Investors would love to feel welcome in a new country. If this does not occur, they bolt out! The political stability of Switzerland has further contributed to the smooth business operations and the enhanced investments .Switzerland is politically stable with no political turmoil and civil wars in the country. This is a very important factor in modern business management and investment. For example, the Middle East with its numerous oil resources has scared away potential investors due to consistent terrorist attack and civil turmoil in the area. In a politically stable country, the social amenities keep expanding. They are not harmed by warfare or constant demonstrations. Even the banks are safe in these scenarios. On the contrary, civil wars and political unrest in a country destroys infrastructural facilities and social amenities. Even business premises and banking facilities risk being destroyed. Investors are not comfortable investing under these circumstances. Most investors have opted to invest in Switzerland away from their country of origin. This is a country that has not experienced any form of unrest for a very long time. Cultural factors contribute also greatly to the excellent banking sector in Switzerland. There are many races and citizens of other countries that reside in Switzerland. Switzerland has, therefore, become an area of cultural intermingling. There are over 6 major international languages being spoken in Switzerland. Cultures meet leading to exchange of ideas. An area with rich cultures attracts many investors because, each believes that they will invest in a country where they will be able to live and enjoy their cultures. It would be difficult, therefore, for a German citizen who only has mastered German to go to an Arab country that only embraces Arabic. Such an investor would not feel at home when going top such a country. The investor would prefer to take his wealth to a country like Switzerland where even his language is majorly spoken. The customer friendly services have played a part in the expansion of wealth management in Switzerland. Banking clients are, for example, accorded special treatment by the bank owners. Each investor or banker has a personal advisor that has been appointed for their case. These advisors have experience in the banking sector. This will assist the investor understand more about the operations of the Swiss banks in case there is a point that they do not understand. This makes investors feel they are a part of the team. This further enhances the efficacy of the Swiss banks as compared to the other banking sectors in the European countries. Furthermore, each dealer in the Swiss bank has the freedom to check their progress online. By so doing, they can check the performance of investments and company analyses. This keeps the customer in touch with the occurrences of the Swiss private companies and banks. Tourism has also played a part in the increasing investment in Swiss banks. Switzerland has a beautiful landscape with magnificent glaciers during the winter period. Winter sports are also a major attraction. During the summer, sun bathing is a major tourist attraction. Cable cars and the animal zoos have all contributed to a booming tourism schedule all round the whole year. The tourist attractions trigger investments especially when some tourists visit the area severally in the course of the year. The fund management industry in 2016 The fund management industry in Switzerland looks like it is headed for greatness in the years to come. Currently, the private banks in Switzerland are regarded as the best in the whole of Europe. Their reduced taxation has also barred the market to North American countries such as Canada and United States of America. One third of the world’s wealth by private means is located in the Swiss banks. This is extremely impressive. This translates to about thirty percent of the world’s private owned wealth. The Cayman Islands is the only nation in the world that rivals Switzerland in storage of privately owned wealth. This wealth is commonly called offshore capital (Barber 76). In 2016, the government policies will have been enacted, policies that would maintain the private banks in their position in the world. This would further include leaving the laws that have been there. New leadership always tends to come with new ideas that end up destroying the former good regimes. The government of Switzerland should only ensure that there is an improvement without changing the former policies. This would include retaining of the reduced overtaxing policy. Overtaxing has continued to scare away investors to other countries such as Britain and US to prevent such scenarios, the Swiss banks should maintain the policy. The fund management in Switzerland has been on the rise for the past 5 years or so. It is, therefore, expected to rise beyond the present standards. This would increase even more investors in this country. Apart from Wealth management, other components of fund management are further expected to rise in the next four or five years. With the advent of Internet learning, the advertisements of the private banks would increase. This would market them even more (Maude 29). The political stability seems likely to continue. This would further increase investments. All these are indications that Switzerland will continue to become a bank for investors from other regions. Any countries willing to acquire such global status are expected to follow the same strategies as those followed by Swiss banks and the Swiss government. Switzerland has, therefore, attained a status of being the best banking institution in the world. This has been achieved through good policing and patience. The country’s strategic location in Europe will further contribute in retaining this status. This is an impressive fete! 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