Introduction Commissions ("Recessions")

The fee due to an asset manager or investment consultant will be established according to the agreement reached with the investor. For example, fixed or percentage fees, a participation in profits or a combination of both may be agreed upon.

Besides a direct fee the asset manager normally receives so-called intrudcution commissions or recessions (which are called "Retrozessionen" in Switzerland).

Introduction commissons ("finder's fees", "kick-backs", "recessions") are remunerations, which the consultant receives from a third party because he distributes products of that third party or because he allows that third party to otherwise participate in the management of the investor`s assets. In the end, it is always the investor who pays for such commissions, be it via high bank fees or broker’s commission or worse price conditions.

Introduction commissions are for example payments, which a bank effects to the asset manager as a reward for selling in-house products to his clients or for opening a client`s account at the bank. By doing this an external asset manager who brings to the bank assets in the value of CHF 10 mill. from his various clients, receives a commission of 2%, which equals CHF 200,000. Normally, 50% of all bank fees will flow back to the external asset manager as recession.

Mostly the investor is not or only partly made aware of such payments.

In 2006 Swiss Federal Supreme Court ruled that such introduction commissions belong to the investor. The asset manager may only retain commissions, if the investor has been informed prior as to the amount of the recessions and has waived any rights to the introduction commissions (Decision of the Swiss Federal Supreme Court dated March 22, 2006 [4C_432/2005]; BGE 132 III 460).

In 2012 Swiss Federal Supreme Court added that even intracompany commissions belong to the investor (Decision of the Swiss Federal Supreme Court dated October 30, 2012 [4A_127/2012]).  

Upon the investor`s request, the external consultant or the bank are under the obligation to inform about all types and forms of introduction commissions.