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Case study: Marcuard Heritage AG

Providing wealth management services in an international environment is a challenging task and requires professional expertise, processes and systems. Marcuard Heritage AG, a Swiss based external asset manager, has faced these challenges by implementing a solid risk framework. Patrick Stauber, CEO of Marcuard Heritage AG, is sharing his expertise on how to manage risks in an international environment.




1) Patrick, thank you for sharing your expertise on this important topic. Can you please introduce your business?

Patrick Stauber: “Marcuard Heritage AG is a highly integrated wealth management company with an international presence with operating companies in Switzerland, Cyprus and Singapore. Our focus on ultra-high-net-worth individuals drives us to provide sophisticated quality services. Marcuard Heritage AG designs and implements holistic wealth management solutions in today’s complex regulatory environment. We focus on a small number of geographic markets, which has allowed us to build up the expertise and resources required to provide comprehensive services to our clients.”

2) What are the main challenges faced by these geographic markets?

“On the one hand, we need to keep up with the regulatory changes in the target markets and ensure their timely implementation within the company’s policy and procedural framework. On the other hand, we need to inform our clients about these changes and provide educational support. However, not only target-market-specific developments require such ongoing monitoring / implementation – the same applies to the global regulatory landscape (e.g. Common Reporting Standard, Foreign Account Tax Compliance Act, General Data Protection Regulation). We can only keep up with these various changes because the information exchange within Marcuard Heritage Group is ensured by regular communication between our in-house compliance, legal, and tax specialists. Where necessary, we also consult with external experts. However, we believe you need to have a limited amount of in-house expertise for regulatory matters, as this is indispensable to overcome these challenges.”

3) How do you organise yourselves internally to manage your risks properly?

“A risk management framework, in our view, is only efficient and effective if every employee is dedicated to it and knows their responsibilities and the company’s strategy. To ensure this, regular communication within the company and the different stakeholders is key. Management thus raises awareness of risk management on an ongoing basis and dedicated ‘risk owners’ are responsible for regularly analysing (reviewing, monitoring, and mitigating) the different risk types and ensuring that the outcome is communicated on a top-down and need-to-know basis.”

4) Do you outsource any services to facilitate your risk management duties?

“No, currently we do not. However, we use the assistance of external service providers for various regulatory challenges (e.g. cross border matters, investment risk monitoring).”

5) What kind of processes or guidelines have you implemented in order to manage your risks?

“We have established a risk management framework following the Committee of Sponsoring Organizations of the Treadway Commission (COSO) guidelines adjusted to our organisational set-up. As already mentioned, all potential risks are assigned to a dedicated ‘risk owner’ who is responsible for following the respective procedures and ensuring regular reporting / communication to the Board of Directors and to management.”

6) Do you use digital tools to facilitate the implementation of your regulatory requirements?

“Yes, we do. We use a Customer Relationship Management (CRM) tool that supports us in particular in our obligations related to anti-money-laundering and know-your-client matters. Furthermore, it helps us to cope with FATCA and CRS reporting obligations and ensures auditable track records. For contract management reasons Marcuard Heritage AG uses an external cloud solution for the management and monitoring of current contracts. In the area of investment suitability, we have a tailored software solution in place covering our needs.”

7) Do you think that proper risk management could be an important factor to attract new clients?

“We believe that in today’s environment and in light of the increasingly complex regulatory framework in which we are operating, proper risk management will play a crucial role for all financial intermediaries. It is difficult to judge whether the implementation of risk management will directly lead to new clients. However, we are convinced that proper risk management will help to build sustainable services for the future, which will indirectly attract clients (e.g. by hiring new relationship managers or engaging with new business partners).”

8) How are you preparing yourselves for the upcoming Swiss regulation, the Financial Services Act (FinSA) and the Financial Institutions Act (FinIA)?

“We have closely followed the upcoming regulations since the FinSA and FinIA have been discussed in the law-making process. Given the international set-up of the Marcuard Heritage Group, we believe that we are well prepared given the experience we’ve had with affiliates / subsidiaries that are subject to prudential supervision (e.g. Marcuard Heritage (Singapore) Pte. Ltd.), which is regulated by the Monetary Authority of Singapore (equivalent to the Swiss Financial Market Supervisory Authority) or Alpinum Investment Management AG (regulated by FINMA). We welcome the above-mentioned changes to Switzerland’s financial market regulation, as they will create new opportunities for our company.”

9) When choosing a custodian, to what extent is its regulatory support the deciding factor?

“For us it is crucial that a custodian bank offers some regulatory support to an external asset manager. In particular, in regulatory areas in which we lack know-how, we appreciate that we can initially address such questions to our custodian bank. Although the custodians cannot render any legal or tax advice, their input is highly valued and helps us to further elaborate on the matter in question with external specialists as the need arises.”

10) What are the top three requirements for intermediaries to successfully manage their risk?

“From my point of view I would suggest to diversify in terms of target markets, revenue producers, and clients. To stay up-to-date with regulatory changes and last but not least select the right outsourcing partner.”