In a speech to representatives of Ticino’s financial center, Stefan Walter, CEO of the Swiss Financial Market Supervisory Authority (FINMA), outlined how the regulator applies its risk-based supervision to individual portfolio management across licence categories. Building on FINMA’s June guidance, Walter said recurring deficiencies identified primarily among portfolio managers under Article 17 of the Financial Institutions Act are also relevant to banks, securities firms and other institutions providing such services. He cited 60 supervisory cases in 2025, up from 32 in 2024 and seven in 2023, while cautioning that these cases represent only a small part of the market. Institutions using complex, high-risk or illiquid products must assess whether they suit each client’s financial position, objectives, knowledge and risk appetite, and must monitor those risks throughout an ongoing mandate. Products are not categorically excluded, but firms must understand and control concentration, liquidity and valuation risks, prevent clients from being disadvantaged by conflicts of interest and avoid incentives that favor in-house products. Outsourcing risk management or compliance does not transfer responsibility, and institutions must retain sufficient expertise to oversee the outsourced functions. FINMA will assess comparable activities and risks across the asset and wealth management sector through its cross-divisional asset management system, while calibrating supervisory intensity to each institution’s size, complexity and risk profile. Its approach uses data analysis, early warning indicators, supervisory reviews, on-site inspections and, where appropriate, stress tests to identify problems before client losses increase.

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