Assets under management are growing, cost-income ratios are improving, and the Swiss asset management industry still enjoys a reputation for stability. Yet Tom Lyons, Head of Communications and Content at GenTwo and lead researcher behind the firm’s latest White Paper, says appearances are deceptive.

He calls it «Shelf Syndrome» – the tendency of small and mid-sized managers to rely too heavily on third-party funds and off-the-shelf strategies. On the surface, it keeps operations lean. Beneath the surface, Lyons warns, it’s a slow erosion of margins, brand value, and ultimately relevance. His analysis shows that the same forces already reshaping global asset management – fee compression, underperformance, and client demand for customization – are beginning to take hold in Switzerland as well.

In a conversation with finews.com, Lyons argues that the next generation of clients won’t tolerate paying advisory fees for commoditized products. He outlines why  the ability to quickly create bespoke, proprietary investment products – could be the key to survival, and offers a practical first step any boutique can take to break free from the shelf.

Mr. Lyons, your White Paper paints a grim picture of small and mid-sized asset managers. How dramatic is their situation really?

We’re not saying the situation is dramatic. We’re saying it’s a slow-motion crisis that many firms don't fully recognize yet. Such «silent crises» can be dangerous however precisely because they get overlooked.

Here are some of the troubling numbers we found hidden behind the headlines: operating profit margins in European asset management have collapsed to just 11.1 basis points of AuM – the lowest since 2008. Meanwhile, 95 percent of active equity funds underperformed their benchmarks over five years, and average fees continue their slide. On the other side, over half of investors now cite underperformance as the primary reason for firing their asset manager. Mid-tier firms are essentially being squeezed from both sides: fee compression above and client expectations for alpha below.

«Over half of investors now cite underperformance as the primary reason for firing their asset manager.»

Our opinion is that when you're a shelf-bound manager essentially outsourcing alpha generation to third-party fund managers – who themselves might not deliver – you're in an impossible position. You're charging advisory fees on top of products that clients increasingly know they could access directly for less.

The dramatic part isn't necessarily the current pain or lack thereof, It's the trajectory. If you project these trends forward five years, you see firms caught between declining revenues and rising costs, with no differentiation to justify their existence. That's not sustainable.

Looking around Switzerland, we don't see too much pain in the asset management space. Are the warning signs perhaps subtler than they appear?

You're absolutely right that Switzerland looks healthy on the surface. But when you scratch beneath the surface, you see the exact same structural pressures building here.

The 2025 Swiss Asset Management Study from AMAS and Zeb is quite revealing on this point. Despite a 5 percent growth rate and an improved cost-income ratio, the industry's overall profitability remains flat. Think about that – growing assets, better operational efficiency, but no improvement in actual profits. That's a classic warning sign of margin compression. In our report we outline other Swiss-specific warning signs too.

So yes, Switzerland's position is still strong relative to other markets, but we're seeing the same underlying dynamics – just perhaps 2-3 years behind the curve. The question is whether Swiss managers will use this breathing room to adapt, or wait until the pressure becomes as acute as it is elsewhere.

You compare some asset managers to shopkeepers selling only what's on someone else's shelf. What exactly is the problem with this kind of specialization?

In our opinion the problem isn't specialization per se – it's lazy specialization versus intelligent specialization. When we talk about «shelf syndrome,» we're describing managers who've essentially become curators rather than creators.

Here's why this is problematic: First, there’s the margin squeeze I just mentioned. Second, there's the alpha problem. If your offering is just a selection of external funds, your performance will largely track the composite of those products. But the majority of active funds underperform their benchmarks. So you're essentially outsourcing alpha generation to managers who themselves might not deliver.

«Clients see BlackRock, PIMCO, Vanguard funds in their statements, not your firm's name.»

Third – and this is crucial in our opinion – you become invisible. Clients see BlackRock, PIMCO, Vanguard funds in their statements, not your firm's name. Over time, your brand gets diluted. As we found in our research, brand is becoming critical as products commoditize.

The real issue is that when your next generation of wealthy clients - who are more fee-conscious and digitally savvy – review their portfolios, they ask: «Why am I paying X for this when it's essentially a blend of funds I could replicate cheaply myself?»

True specialization means having genuine expertise and creating something others can't easily replicate. Shelf dependence is the opposite - it's outsourcing your core value proposition.

Traditionally, creating your own investment products has been expensive, risky – also from a regulatory perspective – and painfully slow. Isn't sticking to existing funds simply smart business?

That was absolutely the rational choice historically – and it explains why so many firms fell into shelf syndrome in the first place. Launching a traditional fund could take 4-6 months, cost $200K+ annually in overhead, and required gathering $150-200 million in assets within 3-5 years or face shutdown. With those economics, buying existing funds made perfect sense.

But those barriers are coming down.

Today, you can use off-balance-sheet special purpose vehicles to issue investment products in weeks rather than months, with lower upfront costs. White-label fund platforms let you piggyback on existing infrastructure – so you get your own branded fund without building the entire compliance and operational apparatus. The regulatory complexity that once made this prohibitive is now being handled by specialist platforms that have industrialized the process.

Meanwhile, the cost of not acting is going up. Client expectations have shifted dramatically – asset managers now say mass customization will be critical in the next five years. Clients increasingly want bespoke solutions, ESG overlays, thematic exposures and other things that generic shelf products simply can't deliver.

The smart business today is using the new tools to reclaim product ownership without the old infrastructure costs. The question isn't whether you can afford to build products - it's whether you can afford not to when your competitors are doing exactly that.

You propose «Assetization» as a way out. What could that actually mean, day-to-day, for an asset manager on the ground?

Practically speaking, Assetization means having a «product factory» at your fingertips - the ability to turn investment ideas into bankable products quickly and efficiently, regardless of size.

Picture this day-to-day reality: Your portfolio manager has a compelling view on, say, European small-cap value stocks with ESG screens. Instead of hunting for the «least bad» external fund that sort of matches this thesis, they can log into a platform and structure this as their own product – whether that's a certificate via an off-balance-sheet SPV, or a sub-fund through a white-label platform.

«It's like having a minimum viable product approach to asset management.»

The key is speed and scalability. Many SPV platforms now allow repeat issuance under a program – so once your umbrella structure is set up, you can issue new series relatively quickly and cheaply. You're essentially building a modular product engine where the heavy lifting – legal structuring, custody, compliance – is handled by specialist platforms, while you focus on the investment strategy.

It's like having a minimum viable product approach to asset management. Instead of your team saying «we can't offer that because no suitable fund exists,» they're saying «give us two weeks and we can build exactly what you need.» Your client conversations shift from «here's what's available on the shelf» to «here's what we can create specifically for your objectives.»

You argue that managers are losing their brand identity. But do end-clients really care whose name is on the product, as long as the performance is decent – which it largely has been in recent years with pretty boring and standardized products?

That's exactly the trap many managers have fallen into - when markets are rising, everything looks fine on the surface. But here's the issue: we're essentially in a beta-driven bull market where even mediocre strategies appear successful.

The real test comes when you dig deeper. The latest SPIVA report from S&P finds 65 percent of all active large-cap US equity funds underperformed the index last year, and that over the last 15 years there has been no asset category in which a majority of the active managers outperformed.

When clients are paying advisory fees on top of fund fees for what essentially amounts to index-like or worse performance, the value proposition becomes questionable.

But beyond performance, there's a more fundamental branding issue happening. When clients review their statements, they see those big fund house names, not your firm's brand. That can’t be good for your brand. And nearly half of asset managers now agree that brand is becoming critical as products commoditize.

Brand identity isn't just vanity – it's about having something distinctive to point to when clients question the value they're receiving. When everything looks the same, price becomes the only differentiator.

What does it actually take to create a compelling investment product as a small player in the institutional space?

Creating compelling investment products as a small player comes down to two fundamental elements: having genuine ideas worth packaging, and having the right platform to execute quickly.

«The best boutique products typically come from managers who've identified a genuine gap.»

On the ideas front, you need either proprietary investment insights - perhaps a quant strategy your team has developed, or deep sector expertise that generates alpha – or you need to be so close to your clients that you understand their specific needs better than anyone else.
The best boutique products typically come from managers who've identified a genuine gap: «Our European family office clients keep asking for infrastructure exposure with currency hedging,» or «We've developed this systematic approach to emerging market credit that consistently adds value.»

The second piece is having a manufacturing platform that lets you turn those ideas into reality quickly and cost-effectively.
The compelling part isn't just the product itself – it's the story you can tell clients: «This exists because we listened to your specific needs and built something just for you.»

Finally, if I'm a boutique manager reading your White Paper with a sinking feeling – what's the first concrete step I can take next Monday morning to turn things around?

Start with what we call a «Shelf vs. Self Audit» – it's something you can literally do Monday morning. Break down your current client portfolios into two buckets: «Shelf» products (third-party funds and ETFs you're using) and «Self» products (anything proprietary you control).

Next, quantify what this is costing you. Add up the external management fees embedded in your client portfolios – that's revenue you're essentially passing through to other managers instead of capturing yourself.

Then identify your «Assetization sweet spot» – one area where you have genuine expertise or keep hearing the same client request.
Take that one idea and reach out to an off-balance-sheet structuring platform or white-label fund provider. Don't try to build everything in-house – leverage specialists who've already solved the regulatory and operational challenges. Get a concrete timeline and cost estimate for turning your idea into a product.

The goal isn't to revolutionize your entire business overnight. It's to prove the concept with one product, show clients you can create rather than just curate, and build confidence in your team that this transformation is achievable.

Most importantly, set a deadline – say 90 days to have your first proprietary product in market. Nothing focuses the mind like a concrete timeline.

Tom Lyons is a 25+ year corporate communications veteran specializing in strategy, messaging, and thought leadership for financial services, fintech, and emerging technologies (in particular blockchain and AI). He currently serves as Head of Communications and Content at GenTwo, a Swiss fintech company dedicated to democratizing financial product creation and expanding investment opportunities, where he leads the company's communications, media, research, and thought leadership initiatives. The company just released a new White Paper about the challenges in asset management.