An organisation based in Switzerland has moved into the business-to-business space. Having established itself in the Swiss private wealth ecosystem, its mission is to have the same impact on risk and performance data in the sector as the open-source movement has had on IT.

In today’s turbulent markets, having the ability to tell clients that their portfolios don’t veer far from agreed risk levels is critical. To meet this need, a Switzerland-headquartered organisation, which has been operating since the middle of the past decade, is moving into the business-to-business arena.

This is a big step for Performance Watcher by IBO (Investment by Objectives). The group gathers daily price and related data from banks and other financial organisations in return for giving these contributors information showing whether their portfolios are in line with, or drifting away from, stated objectives. (Information is given on condition of anonymity, to protect privacy.) IBO earns a living by licensing its software.

With the Financial Conduct Authority in the UK and other regulators such as Switzerland’s FINMA cracking the whip over various firms, ensuring that they have good performance data, and seeing how it stacks up against risk, it is no longer just a “nice to have” item. It’s essential.

“B2B success validates the quality of our data and tools, increases the number of reference portfolios, reinforces the legitimacy of the brand, and, of course, pays for the necessary investments to keep moving forward,” Eric Bissonnier (main picture), chief executive, told this publication. “We remain focused on helping the industry improve the quality of asset management, for everyone’s benefit. Of course, that includes the asset owner. Hence our current focus on asset managers and trustees is a key step towards broader diffusion to BtoC.”

Groups such as independent asset managers, private banks, family offices, trustees and consultants use Performance Watcher’s data. (See a 2022 interview here.)

New jurisdictions
“Our clients are in Switzerland, our home market, Monaco, and the Channel Islands for trustees,” Bissonnier said. “We also plan to expand to other private wealth management centres, such as Singapore, and countries with large IFA networks, such as the UK, France, and Germany.”

“In Switzerland, our goal is to become ubiquitous for private wealth managers and private banks. We aim for 50 per cent of the top 50 IAMs and 20 per cent of the overall markets. That would bring our IAM clients to around 100, which wouldn’t be shocking. We also aim for 25 private banks,” he said. Penetration in Monaco is also a priority, especially for the IAMs, for which we aim for a penetration like Switzerland's.”

"We cater to trustees today and will develop a specific daily risk, performance, and flow monitoring for them. That will give us a head start in the Channel Islands' market, where we are working with a local specialised partner in addition to the Swiss trustees. By then we will also have opened an offering in Asia, probably Singapore. And we should be in the process of building our US presence,” Bissonnier said. 

Raising the stakes
The decision by Performance Watcher to hire Bissonnier two years ago is part the organisation's plan to push itself forward. The CEO has been working in the asset management trenches since 1994, when he joined Chase Manhattan Private Bank in Geneva. In 1998, he moved to alternative multi-manager EIM (which became GOTTEX in 2014 and LumX Group in 2018) where he was CIO until 2019. It was during that period that Bissonnier met Nicholas Hochstadter, Performance Watcher’s founder.

Hochstadter started Performance Watcher out of frustration at what he saw as conflicts of interest in terms of how investment performance data was collected and disseminated in the banking and wider financial space. (We interviewed Hochstadter back in 2016 about the business.)

Since Bissonnier came on board, he has been determined to build on the momentum that Performance Watcher has already achieved.  

“The institutionalisation of Performance Watcher has been quite staggering. We have now become part of the Swiss private wealth management ecosystem, and the discussions with potential clients are now about onboarding and implementation rather than what Performance Watcher is and the vision behind it,” he said. “While some of that breakthrough came from communication, we have shown commitment to our values, and many see our new platform as proof that we are here to stay. The decision to strengthen the management team and the firm’s structure aligns with this progress.” 

The wealth sector continues to have a problem.

“Private wealth performance discussions are, to say the least, not the most objective and transparent. Between client `constraints’, differences in mandate targets, and unclear or inappropriate benchmarks, the ability of both asset owners and investment managers to render the discussion `objective’ is limited,” Bissonnier said. “We provide a methodology and the supporting data that allow for such neutral comparison and show how a manager has achieved his returns without the jargon often used by professionals. We aim to keep it simple but pertinent. The rigour of our quantitative methods, combined with easy-to-use and automated analysis and control tools, has proven a boon for our users.”

Varied use cases for Performance Watcher vary from internal benchmarking between investment groups, C-level performance comparison, and support for client communication to risk and compliance monitoring. 

“There are multiple use cases for our tools. Starting from our daily performance data of real portfolios gathered throughout our community, our clients use the information for comparison, supervision, and reporting. The depth of their embedding in processes is varied, but many use the data as internal KPIs [key performance indicators] at the management level, as a tracking tool for portfolio managers, or for relationship managers to anticipate a client call. Trustees even use our data money flows and risk budgets, with alerts setup to point to potential issues,” Bissonnier said.  

He argued that Asset Risk Consultants in the UK, and Finguide and and Zwei Wealth in Switzerland are industry peers. But Bissonnier said such groups use the data to support their advisory/consulting business, which evaluates the quality of managers. “We do not, and never will, use our data to compare managers explicitly – there is no 5-star rating based on our performance ranking. Hence, at this juncture, we do not see actual peers,” he said. 

Performance Watcher’s revenue model is to generate recurring revenues from licences paid to use the platform, starting at SFr200 ($257) per month for complete access and a fee based on the number of portfolios. It offers options depending on the required services, such as daily alerts, enhanced analytics, and reporting.

The group also sells its indices through a licence, either to data providers or directly to asset managers. Fees are identical whether a portfolio is contributed or not.

“What’s not in the revenue mode, and never will be, is performance consulting of any kind. We will never move towards a potential conflict of interest between the various parties of our community and our incentives, such as performance rankings,” Bissonnier said. 

Just over 12 months ago, the new UK Consumer Duty regime, which sets out how wealth managers must show how they provide value to clients, came into force. Switzerland has a new regulatory framework for external asset managers and trustees. This all adds to the case for firms being able to generate data.

“The regulatory evolution has been very helpful to Performance Watcher. Fifteen years on, our mission has become a need to have rather than a nice to have, and regulation and advocacy efforts have certainly helped,” Bissonnier said. 

“The daily automation of tracking relative and absolute risk levels of mandates lightens the burden on compliance and risk departments by adding an external view on portfolio risk management and strengthening control processes. We have built several tools to push deviations outside of norms to interested parties, ensuring they are aware of them and in time to act on them. This audit trail is handy,” he said.