What Changed
- FINMA reported a sharp rise in escalated supervisory cases concerning portfolio managers under FinIA Article 17 between 2023 and 2025.
- The speech detailed risk patterns identified in FINMA's June 2026 guidance regarding suitability failures and conflict-of-interest management.
- FINMA reaffirmed its cross-divisional, risk-based, and proportionate supervisory approach, including early-intervention tools and the small banks regime.
### Background and Economic Context
In a speech delivered at the Centro Studi Villa Negroni in Ticino on 15 October 2026, Stefan Walter, Chief Executive Officer of the Swiss Financial Market Supervisory Authority (FINMA), presented the regulator’s holistic, cross-divisional supervisory strategy for Switzerland’s asset and wealth management sector. Asset and wealth management represents a core pillar of the Swiss financial center. At year-end 2025, banks and securities firms in Switzerland serviced client assets amounting to approximately CHF 2,500 billion under investment advisory and portfolio management mandates, accounting for close to 43 per cent of actively serviced investment assets nationwide. Cross-border business remains central to this sector, with almost half of actively serviced invested assets originating abroad, including nearly CHF 370 billion managed by Swiss banks for private clients.
In the canton of Ticino—notably the Lugano financial hub—banks and securities firms serviced around CHF 33 billion in client assets under advisory and portfolio management mandates at the end of 2025, with 70 per cent coming from foreign clients. Financial institutions in Ticino overall serviced approximately CHF 95 billion in investment advisory or portfolio management services, of which around 75 per cent originated abroad.
Across the entire Swiss market, individual portfolio management mandates and fund assets under management combined reached approximately CHF 4,222 billion at the end of 2025, split roughly equally between fund assets and individual mandates. Managers of collective assets covered 38 per cent of these assets, while banks and securities firms accounted for 32 per cent (around CHF 1,370 billion), with banks managing two-thirds of their portion via individual portfolio management mandates.
### Key Risk Patterns Identified in Individual Portfolio Management
FINMA’s cross-sector data collection and enforcement monitoring revealed rising risks within individual portfolio management. In June 2026, FINMA published dedicated guidance regarding the risks associated with product usage in individual portfolio management. This action was prompted by a notable rise in supervisory cases involving portfolio managers supervised under Article 17 of the Financial Institutions Act (FinIA). Escalations from supervisory organisations and other sources to FINMA increased from 7 cases in 2023 to 32 cases in 2024, and reached 60 cases in 2025.
While these cases represent a small fraction of the market, FINMA identified recurring risk patterns relevant to all supervised entities offering individual portfolio management, including banks:
1. **Deficiencies in Product Suitability Assessments**: In severe cases, complex, high-risk, or illiquid financial instruments were included in client portfolios without adequate suitability reviews. Examples included foreign investment funds lacking equivalent supervision, structured products such as actively managed certificates (AMCs), and products issued by unregulated foreign entities. Weaknesses included inadequate disclosures, failure to evaluate risk capacity and risk appetite, and over-concentration in complex assets, resulting in significant losses for private clients and retirement assets.
2. **Unmanaged Conflicts of Interest**: Banks frequently perform multiple concurrent roles, serving as portfolio managers, product providers, distributors, and custodian banks. Supervisory cases revealed non-transparent double fee charging, staff remuneration incentives favoring internal products, lack of portfolio diversification, and absence of objective product selection processes.
3. **Institutional Risk Management and Outsourcing Vulnerabilities**: Institutions frequently failed to execute robust initial and ongoing risk assessments for complex products regarding concentration, liquidity, valuation, and conflict-of-interest risks. Furthermore, FINMA emphasized that while smaller firms may outsource risk management or compliance functions to external specialists, the legal responsibility for understanding and managing operational and portfolio risks cannot be outsourced.
### Regulatory Expectations and Supervisory Framework
FINMA’s supervisory response avoids across-the-board supervisory expansion, opting instead to calibrate intensity according to risk profiles. FINMA established a cross-divisional asset management supervisory framework to assess risks consistently across licensing categories, whether involving banks, managers of collective assets, or portfolio managers.
FINMA's regulatory expectations focus on four main pillars:
- **Suitability Requirements**: Mandate assessments must evaluate the client's financial situation, investment objectives, knowledge, experience, risk appetite, and risk capacity both at inception and continuously throughout the mandate.
- **Conflict Management**: Financial service providers must manage conflicts so clients are not disadvantaged, disclose whether product selections are limited to proprietary instruments, and eliminate remuneration incentives that favor proprietary products.
- **Risk Controls and Governance**: Institutions must possess sufficient internal expertise to understand and monitor complex product risks and outsourced operational functions on an ongoing basis.
- **Early Intervention**: FINMA applies a proportionate supervisory regime—such as the small banks regime—using licensing reviews under FinIA and the Financial Services Act (FinSA), data analytics, early warning indicators, deep dives, stress tests, and on-site inspections to address risks before client losses escalate.
### Frequently Asked Questions
**Q1: What specific financial products were linked to suitability deficiencies in FINMA's supervisory cases?**
FINMA highlighted complex, high-risk, or illiquid products, specifically foreign investment funds without equivalent supervision, structured products such as actively managed certificates (AMCs), and financial instruments issued by foreign, unregulated structuring or issuing companies.
**Q2: How does FINMA view the outsourcing of risk management or compliance by portfolio managers?**
FINMA explicitly states that while operational functions or tasks may be outsourced to specialized service providers, responsibility remains with the financial institution. Institutions must maintain sufficient internal expertise to understand, manage, and control their business risks effectively.
**Q3: What are FINMA's expectations regarding potential conflicts of interest and proprietary products?**
FINMA requires institutions to avoid or manage conflicts of interest to ensure clients are not disadvantaged. Institutions must inform clients whether their selection includes third-party instruments or only proprietary products. Additionally, staff remuneration must not contain incentives that favor proprietary products.
**Q4: Does FINMA apply identical supervisory intensity to all supervised institutions?**
No. FINMA applies a risk-based and proportionate supervisory approach, calibrating supervisory intensity according to the size, complexity, and specific risk profile of each institution, as demonstrated by frameworks like the small banks regime.
Who May Be Affected
Swiss banks, securities firms, managers of collective assets, and portfolio managers offering individual portfolio management or investment advisory services.
Cross-Border Context
Nearly 50 per cent of actively serviced invested assets in Switzerland originate from foreign clients, making compliance with international and national standards vital for the sector's cross-border reputation.
What to check next
- FINMA Guidance on the risks associated with the use of products in individual portfolio management (published June 2026)
- Financial Institutions Act (FinIA) Article 17 supervisory provisions
This article provides general information and does not constitute legal advice. Consult the official text and obtain advice appropriate to your circumstances where needed.