Pfaeffikon-headquartered Etops, an independent operational service provider, has combined forces with Deloitte to bring a unique solution to market entitled Assetbox. With Swiss managers now facing the added stress of regulatory compliance, not to mention ongoing operational demands to satisfy institutional investors, the pressure on margins is building.
With Assetbox, Deloitte and Etops have created a series of modules to support managers both in the setting up of operations and funds, registration with FINMA, as well as in the FINMA-required ongoing processes and substance. The Assetbox delivers necessary operations, risk management and compliance functions on an outsourced basis to fulfil FINMA requirements as efficient and practical as possible. Further services include tax reporting, accounting and distribution support across Europe.
With Assetbox, they have created the most comprehensive range of regulatory, operations and compliance outsourcing for asset managers available in the market.
“People realise there’s no getting away from regulation. That’s what prompted us to develop Assetbox. If you have a sound business model and investment strategy there should be no restriction to setting up or continue to exist as a fund manager,” says Michael Appenzeller (pictured), founder of Etops.
Adds Marcel Meyer, Partner at Deloitte: “Assetbox delivers everything a regulated asset manager needs other than investment management. It allows managers to first become regulated most efficiently, once they become licensed we support ongoing processes that FINMA will expect to see; risk management, operations outsourcing, compliance outsourcing. Such functions and processes handled by the manager internally would require them to hire more middle and back-office staff and lead to additional layers of cost.”
This has been an important development for Deloitte as it means they can capture more meaningful market share not only on the auditing and regulatory advisory side, but also on the ongoing compliance services side.
“We are targeting managers across the board from CHF50m to CHF800m in AuM, or even more. Assetbox brings us much closer to the client. We are helping them on a day-to-day basis. Managers are happier to pay for this kind of service because it makes them more professional, more institutional and effectively turning the changes in the market into a competitive advantage,” notes Meyer.
Since Assetbox launched at the very end of 2013 a handful of clients are already under contract with a pipeline of eight to 10 additional clients already in place.
The fact that Assetbox is module-based means that managers have the flexibility to use as many services as they wish. “They may or may not require distribution support, for example in Europe. Everything is kept within a single offering; you don’t need lawyers and consultants helping with regulatory filings, outsourcing the risk function to a third party. All of these elements can be single-handedly addressed by Assetbox,” says Appenzeller.
Commenting on the cost saving capabilities of Assetbox, Appenzeller adds: “In terms of what FINMA wants to see, a fund manager would need to hire two to four people to perform the core functions of risk management, operations and compliance. In Switzerland, that’s going to cost a manager anywhere between CHF250,000 to over CHF500,000. When we work with a manager, we offer a range of services that cost the equivalent of one person, so we’re essentially helping managers to cut their costs by at least 50 per cent.”