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What factors can play a role in the success of Swiss wealth management banks? Prof. Alexander Wagner, SFI@UZH, research presented at AEA/AFA in Chicago.

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Swiss Finance Institute
Thursday, January 19, 2017 - 08:00

In their paper “Which Swiss gnomes attract money? Efficiency and reputation as performance drivers for wealth management banks”, Urs Birchler, René Hegglin, Michael Reichenecker, and Alexander Wagner (SFI@UZH) provide a detailed empirical analysis of Swiss wealth management banks. They document that more skillful banks (those that are more efficiently managed) are able to attract more net new money.


Reputation and trust matter much more than investment performance: When a private bank is covered negatively in the news in the context of tax evasion or tax fraud activities, this results in a reduction of net new money flows to that bank. For a small bank, the cost can easily be a multiple of annual profits, much more important than the direct fines imposed by the US Department of Justice, for example.