Executive Summary
Client onboarding is one of the few cost centers in an independent EAM that generates zero AUM yet carries direct regulatory exposure. In Switzerland, the fully loaded cost of onboarding a single private client routinely reaches several thousand francs before a mandate produces any revenue.
The largest risk is not speed or convenience. It is the accumulation of undocumented decisions, fragmented KYC records, and weak audit trails, which quietly increase regulatory and operational exposure over time, often only discovered during audits or custodian reviews.
For most EAMs, reducing onboarding friction is not a technology upgrade. It is a risk-mitigation decision that lowers structural cost, limits audit uncertainty, and preserves margins without touching investment strategy or client relationships.
Onboarding Is a Cost Center That Produces No AUM
For Swiss independent EAMs, client onboarding sits in a unique category of cost. It requires senior involvement, creates legally binding obligations under the Swiss Anti-Money Laundering Act (AMLA), and consumes internal capacity before a mandate generates any revenue.
From the moment a client relationship is initiated, the firm is responsible for identity verification, beneficial ownership clarification, source-of-funds assessment, suitability checks, and long-term record retention. These obligations apply regardless of whether assets are transferred quickly, slowly, or at all. From an AUM perspective, onboarding represents pure cost incurred in advance of revenue.
Because onboarding is often treated as overhead rather than a measurable cost center, its impact on margins is frequently underestimated.
Staff Time Is the Dominant Cost Driver
There is no official Swiss benchmark for the cost of onboarding a private client. However, industry research from firms such as Deloitte, PwC, and KPMG consistently shows that KYC cost is driven primarily by internal staff time and remediation effort, not external tools or systems.
In practice, onboarding a private client in Switzerland typically requires coordinated input from relationship management, compliance, and sometimes legal or trustee functions, alongside interactions with custodians. Even straightforward cases involve multiple iterations of document requests, clarifications, and approvals.
When the fully loaded cost of senior RM and compliance time in Switzerland is applied, onboarding routinely consumes several thousand francs in internal resources before assets are booked. This is not a quoted benchmark but a direct consequence of labour economics combined with regulatory process requirements.
KYC Friction Increases Risk Rather Than Assurance
Many firms equate thorough documentation with regulatory safety. In reality, FINMA guidance and SRO audit practice place greater emphasis on traceability than volume. Regulators expect firms to demonstrate when information was received, who validated it, and what constituted a complete onboarding file at the time a relationship was accepted.
Fragmented workflows, where documents arrive via email, approvals are implicit, and versions are overwritten, often fail this standard. The information may exist, but the evidentiary chain is weak.
This weakness is rarely visible during day-to-day operations. It becomes apparent during supervisory reviews, custodian audits, or remediation exercises, where uncertainty translates into extended audits, internal investigations, legal support, and delayed onboarding of new mandates.
Audit Trails Are a Regulatory Control, Not an Administrative Detail
Swiss regulation does not require firms to eliminate risk. It requires them to demonstrate control.
FINMA enforcement actions repeatedly show that deficiencies in documentation, approval records, and record retention, rather than intentional misconduct, are among the most common drivers of supervisory findings. An onboarding file that cannot be clearly reconstructed forces firms to rely on institutional memory, which scales poorly and fails under pressure.
For portfolio managers and trustees operating in a risk-averse environment, weak audit trails represent operational and reputational exposure that compounds over time.
The AUM Economics Most Firms Do Not Explicitly Model
Consider a conservative example. A CHF 10 million mandate at a 50-basis-point fee generates CHF 50,000 in annual gross revenue. If onboarding consumes several thousand francs in internal cost, a material portion of first-year revenue is spent before portfolio construction begins.
For clients with trusts, foundations, or cross-border structures, common in Swiss private wealth, the imbalance is greater. Additional signatories, beneficiaries, and custodians increase onboarding effort without increasing AUM. Over time, this creates structural margin leakage that cannot be recovered through investment performance.
Reducing Onboarding Friction Is a Risk-Mitigation Decision
Most EAMs do not need faster onboarding. They need lower exposure per client.
Reducing KYC friction means standardising how information is requested, received, acknowledged, and recorded so that evidentiary quality is built into the process rather than reconstructed later. This approach lowers operational cost while strengthening regulatory defensibility.
Importantly, this does not require changing custodians, outsourcing compliance, or altering client relationships. It requires treating onboarding as a controlled, evidence-producing process rather than a collection of administrative steps.
Why Many Firms Start With Onboarding
Onboarding is mandatory, repetitive, and highly regulated, yet poorly differentiated across firms. That combination makes it the lowest-risk area in which to improve controls while delivering immediate cost and risk reduction.
Even firms that are not ready to modernise client communications or document storage can materially reduce regulatory exposure by addressing onboarding first. It is one of the few changes that improves compliance posture while lowering structural cost.
A Practical Next Step
For Swiss independent EAMs, trustees, and family offices, the relevant question is no longer whether onboarding consumes resources. It is how much undocumented risk the current process accumulates with each new client.
We are currently testing a purpose-built onboarding workflow for regulated financial intermediaries, focused on reducing KYC friction, strengthening audit trails, and lowering structural onboarding cost.
