Acquiring vs. Building a FINMA-Regulated Asset Manager – Strategic Considerations

Introduction
International investors and family offices looking to establish a presence in Switzerland are often confronted with a fundamental strategic question: should they acquire an existing FINMA-regulated asset manager or build a new structure from the ground up?

At first glance, the acquisition of an already licensed entity may appear to be the faster route. In practice, however, the decision involves a range of regulatory, operational and governance-related considerations that are frequently underestimated. Based on practical experience within the Swiss financial sector, it becomes evident that the “cleaner” path often provides the more sustainable long-term outcome.

The Appeal of Acquiring an Existing Platform
The acquisition of a licensed asset manager is often perceived as a shortcut. Potential advantages may include:

- Immediate Market Presence: Brand recognition and an established local footprint.

- Operational Setup: Existing IT infrastructure, service provider contracts and office space.

- Client Base: Established relationships and Assets under Management (AuM) providing immediate cash flow.

Key Challenges of Acquiring an Existing Structure
In practice, several structural challenges may ultimately offset the perceived speed advantage of an acquisition.

1. Regulatory “Change of Control” Complexity
A significant change in ownership, especially when combined with a replacement of executive management and the Board of Directors, triggers a detailed FINMA review process.

In many cases, the simultaneous replacement of shareholders, executive management and governance bodies can significantly increase the complexity and duration of the approval process.

During this transition period, buyers may find themselves in a “strategic grey zone”: economically exposed to the investment while remaining unable to fully steer the company’s operational and strategic direction, as the organization continues to operate within its legacy structures until formal approval is granted.

2. Legacy Liabilities and Hidden Costs
Due diligence processes rarely uncover the full extent of historical risks. Post-acquisition, investors may encounter:

- Compliance Gaps: Historical deficiencies in client documentation or AML-related processes.

- Strategic Exit Costs: Operational, financial and legal burdens associated with exiting client segments or activities that no longer fit the new owner’s strategic direction.

- Hidden Liabilities: Tax-related risks or unresolved legacy disputes that may significantly increase the effective acquisition cost.

3. Key Person Dependencies
Swiss wealth management remains a highly relationship-driven industry. Client loyalty is often linked more closely to individual advisers than to the legal entity itself.

If key personnel depart following a transaction, investors may find themselves owning an expensive licensed structure with rapidly diminishing assets and limited strategic value.

The Greenfield Approach: Strategic Flexibility and Clean Governance
Building a new structure may initially appear slower, but it can offer significant long-term strategic advantages.

Clean Governance and Modern Infrastructure
A Greenfield structure allows investors to establish governance, compliance and operational frameworks according to current regulatory expectations from day one.

This approach avoids many of the integration challenges associated with legacy systems and allows for the implementation of a modern and scalable operational infrastructure without historical constraints.

The “Smart Start”: Gradual Market Entry During the Licensing Process
A common misconception is that no commercial activity can take place until the full FINMA licence has been granted.

In practice, however, there are ways to gradually establish market presence during the build-up phase. By leveraging the Swiss Register of Client Advisers, qualified professionals may be registered within a relatively short timeframe, subject to the applicable regulatory framework.

This staged approach may allow firms to gradually establish advisory activities, onboard clients and build operational infrastructure while the full FINMA licensing process for a discretionary asset manager progresses in parallel.

Conclusion
There is no universally correct answer to the question of acquisition versus Greenfield development.

The appropriate strategy depends on several factors, including:

- Risk Appetite: Do investors wish to manage historical structures and potential legacy risks, or establish a new organisation from the ground up?

- Operational Timing: Is a staged market entry approach sufficient during the licensing phase?

- Governance Standards: How important is it to implement governance and compliance structures according to the organisation’s own standards from day one?

While acquisitions may provide faster initial access to the Swiss market, they may also involve considerable complexity relating to regulatory approvals, legacy structures and organisational integration.

In many situations, a carefully planned Greenfield setup may ultimately provide a cleaner, more flexible and more sustainable foundation for long-term success in the Swiss wealth management industry from both a governance and operational perspective.

The Reality of Being a Director in Cross-Border Structures

In recent years, I have observed a recurring pattern in internationally structured businesses: a Swiss entity is established, a local director is appointed, and operations are driven across multiple jurisdictions.

On paper, the structure appears sound. In practice, it often reveals a fundamental misunderstanding. A Swiss company is not an administrative wrapper. It is a legally and operationally accountable entity, governed by one of the most robust regulatory frameworks in the world.

The Illusion
From an international perspective, the logic often seems straightforward:

• Establish a Swiss entity

• Appoint a local director

• Conduct business across borders

• Rely on the reputation of the jurisdiction

This approach assumes that governance can be geographically separated from operations.
It cannot. Legal responsibility remains anchored in the entity itself — and therefore with its governing bodies.

The Reality
The role of a director in Switzerland is not symbolic.
It carries:

• personal accountability

• fiduciary duties

• responsibility for oversight and decision-making

• an obligation to ensure that the company is properly governed and structured

Even when business activities take place abroad, the Swiss entity remains responsible for how those activities are conducted, structured, and controlled. A director cannot delegate responsibility simply because operations occur elsewhere.

Governance Is Not a Formality — It Is Personal Liability
What is often underestimated in international setups is the practical reality of Swiss governance. Swiss law does not treat a company as an abstract vehicle. It assigns clear responsibility to its governing bodies — and ultimately to the individuals behind them.
This becomes particularly relevant in areas such as:

• withholding tax (35%) in cases of non-arm’s length transactions or hidden profit distributions

• social security contributions in cases of misclassified compensation structures

• VAT in cross-border service arrangements and incorrect treatment of supplies

• capital structures and financing arrangements that do not withstand regulatory scrutiny

These are not theoretical considerations. Failures in these areas can result in direct personal liability of the responsible directors.

International Structures Increase Complexity
Once multiple jurisdictions are involved, the situation becomes significantly more complex. A typical structure may involve:

• a Swiss entity

• US-based investors or capital providers

• UK-based deal origination

• operational exposure in emerging markets

This introduces additional layers such as:

• OECD standards (including transfer pricing and substance requirements)

• international VAT regimes

• local regulatory and tax obligations

These frameworks are not harmonised. They are often inconsistent — and the responsibility for navigating them does not disappear. It remains with the director.

The Price of Swiss Stability
The reputation of Switzerland is not a branding exercise.
It is the result of consistent enforcement of rules:

• legal certainty

• predictability

• protection of market participants

This stability exists because standards are high — and applied. For a director, this leads to a simple conclusion: Compliance is not optional. It is the foundation of risk management.

The Tension
This creates a structural tension that is often underestimated:

• Shareholders seek speed and opportunity

• Markets demand flexibility

• International deal flows evolve rapidly

At the same time:

• governance requires discipline

• regulatory expectations require clarity

• decision-making requires substance

These forces do not always align. In many cases, the director finds himself positioned between strategic ambition and legal responsibility.

Where It Often Breaks
In practice, challenges typically arise when:

• governance is treated as a formality rather than a function

• directors are expected to validate decisions rather than assess them

• risk is implicitly transferred to the local structure without corresponding control

• the substance of the organisation does not match its external positioning

At that point, the structure may still appear intact — but its foundation is already compromised.

The Role of the Director
A director’s role is not to facilitate decisions at any cost.
It is to ensure that decisions are:

• understood

• structured

• aligned with the legal and regulatory framework

• sustainable over time

This requires independence of judgment. And occasionally, it requires restraint.

Conclusion
Cross-border structures can be highly effective — if they are built on clarity, alignment, and genuine understanding of responsibilities. They become fragile when governance is assumed rather than implemented. A Swiss company does not derive its strength from perception. It derives it from structure, substance, and accountability. And ultimately, from the willingness of its directors to uphold them.

Joachim Wegmann is a Swiss-based director and advisor focusing on governance, structure and cross-border investment platforms.

Fit & Proper: More Than a Regulatory Checkbox

In regulated financial institutions, the concept of “Fit & Proper” is often treated as a formal requirement. Candidates submit documentation, regulators perform background checks, and once approved, the matter is considered closed.

In reality, however, Fit & Proper is not a one-time administrative hurdle. It is a continuous obligation — and more importantly, a mindset.

Over the years, I have come to understand that the true meaning of Fit & Proper only becomes visible when governance structures are under pressure. It is in difficult situations — not in stable ones — that the real quality of leadership and oversight is revealed.

Beyond formal criteria
Regulators typically assess Fit & Proper based on:

• professional qualifications,

• relevant experience,

• reputation,

• financial soundness,

• and the absence of criminal or regulatory sanctions.

These criteria are necessary. But they are not sufficient.
A person may meet all formal requirements and still fail to act in a way that reflects the spirit of the role. Fit & Proper is not only about past records; it is about current behaviour and decision-making. It is ultimately a question of character, judgement, and accountability.

Fit & Proper as a mindset
At its core, Fit & Proper represents a simple but demanding principle: A person in a regulated function must act with integrity, transparency, and responsibility — even when it is inconvenient. This includes:

• respecting governance structures,

• accepting oversight,

• documenting decisions properly,

• and avoiding concentrations of power that bypass established controls.

Fit & Proper is therefore not a title. It is a daily discipline.

Typical red flags in practice
In real-world situations, certain behavioural patterns often indicate deeper governance problems.
Examples include:

a) Inconsistent or unclear residency and professional disclosures
When individuals appear with different domiciles or professional bases across various corporate or regulatory contexts, this raises questions about transparency and credibility.

b) Formal compliance without internal alignment
Some individuals focus on passing the formal Fit & Proper test but do not adopt the mindset behind it. They see regulation as an obstacle rather than as a framework for responsible leadership.

c) Concentration of control in one person
Healthy governance requires checks and balances. When one individual attempts to control decisions, bank access, or operational matters alone, bypassing proper approvals, this is a serious warning sign.

d) Bypassing established processes
Payments, strategic decisions, or contractual obligations made without board approval or proper documentation undermine the integrity of the institution.

Each of these elements may appear minor in isolation. But together, they often indicate a structural problem.

Collective responsibility: Fit & Proper is not an individual label
Another often overlooked aspect is that Fit & Proper is not only an individual assessment. In regulated institutions, it is a collective responsibility.
Senior executives, board members, and other approved persons are expected not only to meet formal criteria themselves, but also to uphold the governance framework as a group.

In practice, governance failures rarely occur because of one dominant individual alone. They often arise because others in the structure:

• remain passive,

• avoid confrontation,

• or prioritise personal or financial interests over institutional integrity.

When formally approved individuals tolerate behaviour that contradicts basic governance principles — for example, the concentration of control in a single person or the bypassing of established decision processes — the problem is no longer individual.
It becomes systemic.
Fit & Proper therefore requires not only personal integrity, but also the courage to uphold principles, even when this involves professional risk or personal discomfort.
A governance structure where approved individuals remain silent out of fear of losing their position is, in substance, no longer a Fit & Proper environment.

A continuous obligation
One of the most important lessons from practical experience is this:
Fit & Proper is not something you achieve once. It is something you must demonstrate continuously.
Regulators may grant approval at a specific point in time. But reputation, conduct, and governance behaviour are assessed every day — by regulators, counterparties, investors, and colleagues.
In this sense, Fit & Proper is less about passing a test and more about maintaining a consistent professional identity.

Conclusion
The concept of Fit & Proper is often perceived as a technical or bureaucratic requirement. In reality, it is one of the most important foundations of trust in the financial industry. It reflects:

• personal integrity,

• institutional discipline,

• and the willingness to act responsibly under pressure.

In the end, Fit & Proper is not defined by a regulator’s decision. It is defined by the choices professionals make — especially when no one is watching.