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Aquila prepares for a new era

Julius Baer intermediaries Aquila CEO

After 20 years, Aquila’s founder CEO will retire in 2021, handing responsibility for the intermediary platform to a young lawyer specialising in regulatory compliance. Her appointment reflects Switzerland’s transition to a highly regulated environment.

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In 2021, Aquila enters its 22nd year and a distinct second stage in its history. After building the Swiss intermediary platform steadily from its inception in 2000, Max Cotting, the founder CEO, will retire in April and hand over to a younger person with a skill set entirely suited to the new world Aquila will find itself in.

He has chosen Vivian Jain as his successor, the current Head of Legal Compliance Risk, who will be just 36 when she takes over. Not only is she almost 30 years younger than Cotting’s 64 years, but also she brings a strikingly different background to the job. While Cotting was schooled in the more traditional skills of relationship management, Jain is a lawyer specialising in regulation.

In many ways, Aquila’s management transition symbolises what’s happening across Switzerland’s intermediary, or external asset manager, sector. The new regulatory regime ushered in gradually from January 1, 2020, by the Financial Services Act and Financial Institutions Act, will transform the landscape for intermediaries over the next few years. It will raise the bar far higher in terms of regulatory compliance, as well as capital and technology.

Naturally, that makes Jain’s expertise highly relevant for a platform that provides the full set of support services to its 80 partner firms – including legal and compliance risk, finance, IT solutions, investment and banking custody. Of these, legal and compliance has just become the most testing. Arguably, Jain’s age is also an asset, as she has a similar mindset to the younger entrepreneurs and inheritors who are the future clients of wealth management. 

“During the last 20 years, asset management has shifted constantly to an IT, regulatory risk and legal platform,” explains Cotting. “That’s why I think the future CEO of our company has to come from this area. Vivian is the perfect mix in combined participatory approach, regulatory and legal knowledge. That’s why she gets to become CEO.”

Preparing for a change in the landscape
As Jain prepares to take over, the strategy remains the same. Similarly, she does not expect to accelerate growth, as the process of selecting and onboarding partner firms takes a great deal of diligence. But as a trained lawyer who previously worked in PricewaterhouseCoopers’ regulatory practice in Zurich before joining Aquila in 2014, she has a thorough understanding of the new regulatory regime and believes that some intermediary firms will find they have no choice but to join a larger partner such as Aquila.

“The whole regulatory landscape is changing, and as requirements for asset managers get higher and higher, reputational risks can become even bigger than financial risks. Reputation is all you have if you are a one-, two- or three-person show. And if you lose your reputation you may lose your entire business. So I think there is a shift in the risk perspective. You’re used to operational risks. You always have financial risks. It’s actually the reputational risks that are getting stronger.”

In Jain’s opinion, many intermediaries have yet to realise the difficulty of the task they face in getting licensed. She says it’s a major ongoing undertaking, taking not just significant regulatory capital, but also a sizeable investment in technology in order to meet the requirements in areas such as product suitability. Indeed, she thinks the Swiss Financial Market Supervisory Authority doesn’t expect that all 2,500 of Switzerland’s intermediary population will be able to get a license and, in fact, would welcome consolidation.

“Another era is starting which external asset managers right now can’t yet imagine,” she says. “But maybe by the second half of next year people will start to realise that it’s not that easy anymore and that every asset manager has to reassess their whole organisation, to reassess the costs, and whether they have enough equity. So this will raise  opportunity for Aquila.”

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