Moshe Strugano Describes the EAM model in Asset Management

A somewhat new approach in the asset management prospect, the EAM business model is getting popularity all over the world. It consists of managing HNW client’s assets via a well-built, workable synergy with top private banks. The whole business model centers on an external asset manager (EAM) offering service to customers earlier served by a bank in close partnership with the RMs of the bank.

External Asset Managers (EAMs) can be called Independent Asset Managers (IAMs) or Financial Intermediaries (FIMs). Just as several asset management ideas and innovations occurred in Switzerland and Luxembourg, EAM initially came out in Europe in the 1990s. Many bankers worked as individuals or in teams to better serve their high net worth clients. Eventually, EAMs have been significantly outranged the conventional private bankers due to their expertise and experience.

Moshe Strugano (Attorney – Strugano & Co) says, “EAMs embrace a capital market services (CMS) license and perhaps function within the bank’s sphere.” Several banks, mainly those of Swiss origins, have been practicing this model for years. Credit Suisse has approx. CHF90 billion in assets under management from EAMs, offering custody, brokerage, and lending services by external managers.

With the growth of information and services, EAM services augment in Europe, America, and Asia. Hong Kong and Singapore are unquestionably the liveliest financial regions In the Asian financial market, and the thriving expansion of EAMs are conventional. It has been observed that the potentials and expansion of the EAM market in the two regions are higher than those in other countries are. Hong Kong is taking advantage of the fast increase in high-net-worth populations in the Mainland, while Singapore is taking advantage of a high-net-worth individual in Southeast Asia such as Thailand and Indonesia. The market predicts that AUM managed by EAMs in these two places will increase 10% market share in whole asset management in the future.

Compared with conventional private banks, the major variations of EAMs are that it is outside the big financial institutions, and its welfare is associated with the benefit of the customers. Knowledgeable relationship managers know the financial needs and appetite of clients, offering the most favorable investment advice and solutions. Its basic structure is a tripartite partnership. The client has complete authority to commend EAM to handle the “managed assets” kept in private banks (or brokerage firms). Private banks are the guardian and deal recorders of the assets. EAMs then keep the focus on handling the assets and providing services to the clients. Decisions related to investment are made only for customer’s financial gains (not on account sales commission), EAM, as an asset manager, focuses on building long-term, independent, and complete partnerships with clients.

Seeing as the financial crisis before years back, investors look ahead to direct investment vehicles that have no or limited risk. The client now demands a more transparent investment structure and asks to contribute more to the managerial process of their investment. The closely synchronized EAMs structure fully meets the expectations of the client to defend and cumulate their family assets at the same time.

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