«The market consolidates without anybody joining» – this is how Heiner Grueter (picture) describes the current situation. In fact, the consolidation of independent asset managers, which has been recommended for long now, has not taken place so far despite of shrinking profits, waning margins, weak performances and clients moving their money out.

«It seems as if we still lived on a blissful island» says Grueter in the talk with finews.ch. He has worked as the CEO of asset manager WMPartners in Zurich since April 2011. The organization, which was founded in 1971, employs around 30 members of staff and belongs to the oldest asset managers of the country. With client deposits of more than 2 billion Francs, it also belongs to the largest of its kind.

Stress is still too little

For Grueter, there are a couple of reasons why the large consolidation movement has not taken shape yet. The financial «stress» of many companies was obviously still too little, or, to put it in other words: Many asset managers could still draw from their reserves, judges Grueter. Many players were still wishing for self-realization rather than for an entrepreneurial vision.

«The advantages of being a large unit after a consolidation are diffuse to many very small entrepreneurs» explains Grueter further. He also assesses that many asset managers had unrealistic ideas about selling and integration. «They see their businesses in the best light and ignore the huge amount of regulations which they will still have to put up with.»

Providing valuable ideas

Grueter has a thoroughly non-preoccupied view on the sector. That is because his career largely did not take place in the financial sector, but in business consultancy, among others at Bain & Company, as well as in the IT-sector. However, he has always worked closely at the banking and insurance sector, so that he has followed the development over the last ten years closely.

Being a career changer (in the financial sector) he can provide valuable ideas, which was one of the reasons why WMPartners have hired him. «Sometimes it is necessary to have people who question what is there and who thus help to find new approaches and solutions», says Grueter, who has «homogenized» and untwined many processes and procedures with his current employer already.

Breaking up the value chain

«A certain ‹Toyotaization› cannot be avoided by the sector» explains Grueter and means those developments, which are now being introduced at all major banks and which are labeled ‹industrialization› there – which means breaking up the value chain in connection with the question of which services a financial institution should handle itself and which it should outsource or obtain from other service providers.

«It is only through such an approach that the financial sector will manage to professionalize in the next years» explains Grueter. These fundamental changes were, however, still a large threat to many asset managers. There were different reasons, which made it difficult for some people involved.

Confidentail data

Firstly, the transparency in the sector was very limited. «It is not clearly known, who wants to sell» says the CEO of WMPartners. This could also explain the strong reluctance. «Additionally, many players are very hesitant to make confidential data of their enterprises accessible» judges Grueter and obviously many asset managers were anxious about buying something problematic, or to put it in other words, unreported income from potential partners. Last but not least there were many unclarities about regulations, which was why many asset managers simply decided to wait.

All this explains why a consolidation has more ore less has not taken place yet. In this context Grueter explains: «We have a lot to offer to independent asset managers, who see themselves confronted with the problems mentioned. Being one of the largest independent institutions involved in Switzerland, we also provide our platform to others or act as a contact point for selling enterprises.»

Continuity for the staff

This would mean an immediate reduction of duties for tasks of administration and regulations, says Grueter. Additionally, specialists from research, portfolio management and marketing of WMPartners could supply new input and provide a high degree of continuity for the staff of partner companies, as they were integrated into an experienced team. «After all the continuity of clients is secured in terms of the existing investment strategy and the connections with depository banks» stresses Grueter.