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Five rules for promoting wealth management services to clients domiciled abroad

Tuesday, 23 May 2023

Monde Economique by Elena Liotto, Head of Marketing & Communications at Indigita SA

Marketing wealth management services to prospects or clients domiciled abroad can be a regulatory mine field. As soon as their business enters a cross-border context, financial institutions find themselves in a thicket of rules that govern the types of marketing activities, their content, and the types of financial products these activities refer to. By following these five key principles, financial institutions will lay the foundation for marketing their services and products in a safe and compliant manner.

It's the responsibility of the management of financial institutions to ensure all employees, in particular client advisors, are aware of the most current policies and procedures that shape their communications with clients and prospects.

Rule #1: Know your audience

Knowing your target segments is key for any marketing activity, and in wealth management the segmentation is likely to be even more nuanced compared with other industries. For instance, whether a person is a prospective or an existing client can fundamentally change the type and scope of permissible marketing activities in a cross-border context. More complex situations may require the separate targeting of additional groups, like beneficiary owners or people holding power of attorney. The applicable rules for marketing to these different groups can vary greatly.

Rule #2: Understand the specific cross-border situation

Once the target groups have been identified, we need to understand the exact cross-border situation at hand. Is the recipient of a marketing communication domiciled abroad, and are they currently staying in Switzerland? Does a person domiciled abroad contact a Swiss wealth manager from outside of Switzerland, for instance by phone or email? Or is a Swiss wealth management advisor planning to market services outside of Switzerland to a person domiciled abroad? Once the cross-border situation has been mapped out, the applicable cross-border rules can be determined to find out if marketing activities are permissible at all, and if so, which restrictions and requirements apply. For instance, some countries require a local license to sponsor events.

Rule #3: Examine the content of your marketing activity

If a cross-border scenario allows for marketing activities in general, we need to examine the content of our communications. In the eyes of the local regulator, sponsoring an event to increase general brand awareness may be different from describing specific services. There are also differences between marketing wealth management services, which may require a local license, and promoting specific financial products, which may be subject to investor protection rules. Knowing which category our marketing content falls into is key to determine the appropriate actions.

Rule #4: Determine client qualification

In wealth management, all clients are not created equal. Some are considered qualified to handle more complex investment decisions, based on, for instance, their individual financial circumstances as high-net-worth individuals, level of financial knowledge, experience, or size of the financial institution they represent. The Financial Services Act (FinSA) in Switzerland and the Markets in Financial Instruments Directive (MiFID II) in Europe were established to protect investors. They distinguish between qualified and non-qualified clients when it comes to both the type of permissible marketing activities and their content. Knowing when a person can be deemed a qualified investor is crucial to ensure the compliance of marketing activities.

Rule #5: Ensure data protection

For cross-border situations involving Switzerland and / or the European Union, the new Swiss Federal Act on Data Protection (nFADP), which enters into force on 1 September 2023, and the existing European General Data Protection Regulation (GDPR) apply. Both regulations demand explicit consent from the client or prospect before their personal data can be processed for marketing purposes. In addition, financial institutions must identify which information they are legally bound to keep under banking regulations, and which information they need to delete or rectify at the client’s request. Particular attention to data protection rules needs to be paid if client data is transferred between business entities in different jurisdictions. In general, all Swiss banks and wealth managers must ensure their marketing materials and communications comply with nFADP and the data protection laws applicable in their target markets. This means obtaining recipients’ consent for marketing communications, providing a clear privacy policy, allowing individuals to opt out and ensuring that client data is processed in a secure and transparent manner.

Following the five rules outlined above creates the foundation for compliant marketing activities and helps to better handle the inevitable complexity of communicating about wealth management services in a cross-border setting. It's the responsibility of the management of financial institutions to ensure all employees, in particular client advisors, are aware of the most current policies and procedures that shape their communications with clients and prospects. A strong compliance culture forms the foundation to promote wealth management services in a safe and appropriate manner, and, increasingly, financial professionals are supported in their marketing activities by automated cross-border checks and rules application.


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