External asset managers and custodian banks: a relationship that goes beyond operations

Independent asset managers enjoy a privileged relationship with their clients. They advise them, manage their assets within the scope of their mandate and support them over the long term.

Yet behind this relationship lies a third essential player: the custodian bank.

Its role is not limited to safeguarding assets or executing transactions. For an independent asset manager, the choice of banking partner directly contributes to the environment in which they conduct their business.

A three-way relationship

The model is based on the complementary roles of the client, their independent asset manager and the custodian bank.

The external asset manager manages the relationship with the client and exercises their management mandate over the assets held in custody. The client opens an account with the bank, deposits their financial assets there and benefits from both the services of their asset manager and those provided by the custodian bank.

The bank, for its part, is responsible in particular for safeguarding assets and executing transactions based on the instructions it receives. It also provides a range of services that complement account management, such as mortgage financing, Lombard loans and debit or credit cards.

Their roles are distinct, yet complementary. This structure enables independent asset managers to preserve one of the fundamental characteristics of their model: their independence in the relationship with, and advice provided to, their clients.

Much more than a custodian bank

In practice, the needs of external asset managers today extend well beyond the execution of transactions.

Digitalisation, regulation, access to markets, operational requirements and evolving client expectations have gradually made their environment more complex.

The custodian bank must therefore be able to provide the tools, services and expertise they need in their day-to-day activities, while understanding the specific features of their business model. In short, it must be able to find pragmatic solutions with agility and speed.

At Piguet Galland, we have been supporting external asset managers for more than 25 years through a highly experienced team dedicated specifically to their needs.

The objective is simple: to enable them to focus on their core business and their clients.

Strength, experience and trust

In our view, this collaboration rests on three key dimensions.

Strength, first and foremost. In an uncertain economic and geopolitical environment, the stability of the custodian bank is an important element of the relationship. Piguet Galland benefits from deep historical roots in Switzerland and the backing of its reference shareholder, Banque Cantonale Vaudoise (BCV).

Experience, secondly. The members of our dedicated team understand the day-to-day realities faced by independent asset managers, the constraints they encounter and the way their profession is evolving. This knowledge enables us to foster direct dialogue and provide responses tailored to the situations they face.

Trust, finally. A relationship between an external asset manager and their bank is not built solely around tools and processes. It develops over time, through availability, transparency and the pursuit of shared objectives in the interests of clients.

A relationship that remains fundamentally human. Technology is playing an increasingly important role in wealth management. Platforms are becoming more sophisticated, processes are being automated and artificial intelligence is already opening up new possibilities.

These developments are essential. But they are no substitute for human relationships.

Understanding an asset manager's business model, knowing their needs and being available when a particular situation requires a tailored response remain essential aspects of the relationship.

It is this combination of strength, expertise, tools and proximity that enables a custodian bank to go beyond its purely operational role.

And to become a genuine trusted partner for the external asset manager.

In our next article, we will explore the future of the external asset management profession: how is it evolving in response to changing client expectations, digitalisation and artificial intelligence?