FinSA and FinIA in Switzerland: legal framework, FINMA, adviser register and practical cases
1. Why these two laws exist and what they have changed
Since 1 January 2020, Switzerland has relied on two cornerstone laws to regulate financial activities:
- FinSA (Financial Services Act): rules of conduct and client protection
- FinIA (Financial Institutions Act): authorisation, organisation and prudential supervision of certain financial actors
These laws were designed as a coherent framework:
FinSA governs the “how” (how services are provided to clients), while FinIA governs the “who” (who is authorized to operate and under which conditions).
1.1 Objectives of the reform
The main objectives are:
- to strengthen investor protection, in particular for retail clients
- to align Swiss law with international standards (without mechanically replicating EU law)
- to clarify legal statuses (adviser, asset manager, securities firm, fund management company, etc.) and their associated obligations
- to improve traceability (documentation, justification, processes) and overall market discipline
2. FinSA: the “client-facing” law (rules of conduct)
FinSA governs the relationship with the client. It applies whenever financial services are provided to clients in Switzerland (or in certain situations considered as having a sufficient Swiss nexus).
2.1 What FinSA considers “financial services”
Typically, these include:
- investment advice (personalised recommendations on financial instruments)
- portfolio management (discretionary mandates)
- receipt and transmission of orders
- execution of orders
- granting of loans for the acquisition of financial instruments (subject to conditions)
The key point is this: the qualification depends on the activity actually carried out, not on the commercial label (“consultant”, “advisor”, “coach”, etc.).
2.2 Client categories and their effects
FinSA distinguishes in particular between:
- retail clients: highest level of protection
- professional clients: reduced protection (assumed expertise)
- institutional clients: lowest level of protection
This classification determines the level of requirements regarding information duties, suitability/appropriateness checks, documentation and due diligence obligations.
2.3 FinSA obligations that arise in almost all cases
2.3.1 Duty to inform
Clients must be informed about:
- the nature of the service
- the risks associated with financial instruments
- costs and fees (and, where applicable, retrocessions / conflicts of interest)
- whether the advice is provided on an independent basis or not (depending on the model)
2.3.2 Appropriateness and/or suitability assessment
Depending on the type of service:
- execution-only: reduced requirements (with limits)
- investment advice: appropriateness assessment (knowledge/experience) and, in certain cases, suitability
- discretionary portfolio management: enhanced suitability assessment (objectives, financial situation, risk tolerance)
2.3.3 Documentation and traceability
There is an obligation to document:
- what was recommended or decided
- on what basis (client profile, objectives, available information)
- which information was provided to the client
In practice, this is a critical issue: without proper written records, defending a position in the event of a dispute becomes extremely difficult.
2.3.4 Affiliation with an ombudsman
Financial service providers subject to FinSA must generally be affiliated with a recognised ombudsman, allowing for out-of-court dispute resolution.
3. FinIA: the “status and authorisation” law (prudential regulation)
FinIA determines which actors must obtain authorisation and be subject to supervision. It is the law that turns certain activities into fully regulated professions, with requirements relating to organisation, capital, governance and internal controls.
3.1 Who is subject to FinIA
FinIA applies in particular to:
- asset managers (in the regulatory sense)
- trustees
- managers of collective assets
- fund management companies
- securities firms
Important: banks remain primarily governed by the Banking Act, although they are obviously subject to FinSA with respect to client conduct.
3.2 Authorisation and organisational requirements: what this entails
An entity subject to FinIA must generally demonstrate:
- an adequate organisation (governance, segregation of functions, internal controls)
- proportionate risk management
- operational compliance
- management guaranteeing irreproachable business conduct
- sufficient financial resources (depending on the category)
For asset managers and trustees, supervision is often carried out through a recognised supervisory organisation (SO), under a “FINMA + SO” model.
4. FINMA: its practical role under FinSA and FinIA
FINMA is the Swiss financial market supervisory authority. Within the FinSA/FinIA framework, its role is twofold:
- under FinIA: granting authorisations and supervising entities (directly or via supervisory organisations, depending on the category)
- under FinSA: overseeing the system infrastructure (for example, approving adviser registration bodies, recognising certain entities, and publishing guidance, positions and FAQs)
In practice, as soon as a business model involves investment advice, discretionary asset management or the structured distribution of financial products, the first reflex should be to qualify the activity and determine the applicable regulatory regime.
5. The register of client advisers: who must register and why
FinSA introduced a register of client advisers. The objective is to ensure that certain individuals advising clients in Switzerland meet requirements regarding:
- knowledge of FinSA rules of conduct
- adequate professional training
- professional liability insurance coverage (where applicable)
The register is maintained by approved registration bodies, not directly by FINMA.
5.1 General logic
- the register is maintained by approved registration bodies
- the registration obligation mainly concerns advisers who do not already benefit from equivalent prudential supervision through a supervised financial institution
5.2 Typical cases where registration becomes relevant
- advisers acting for a Swiss service provider not subject to prudential supervision
- advisers of foreign financial service providers offering services in Switzerland (depending on structure, clientele and presence)
- hybrid models where an entity presents itself as “advisory” but in practice provides investment advice on financial instruments
Conversely, where an adviser acts for an entity already subject to prudential supervision (e.g. a bank, securities firm or authorised asset manager), registration may not be required, depending on the specific circumstances.
Caution: the boundary is technical. It depends on the structure (employer / principal), prudential status, place of activity, client type and the exact nature of the services.
6. Two practical cases: financial adviser vs asset manager entrepreneur
6.1 Case A: “financial adviser” entrepreneur (investment advice without discretionary management)
6.1.1 Situation
An entrepreneur establishes an advisory firm and offers retail clients:
- personalised recommendations on ETFs, equities and bonds
- a target asset allocation and periodic reviews
- the client retains control: the client decides and executes (or instructs execution); the adviser has no discretionary mandate
6.1.2 Regulatory qualification
- FinSA: very likely, as personalised investment advice on financial instruments is a financial service
- FinIA: not necessarily, as long as there is no discretionary management and no activity qualifying as a regulated financial institution
6.1.3 Key obligations to implement
- client classification (retail / professional / institutional)
- information processes (risks, costs, potential retrocessions and conflicts)
- appropriate assessments (appropriateness/suitability depending on the service)
- robust documentation: recommendations, rationale, profiling basis
- affiliation with an ombudsman
- assessment of the obligation to register in the adviser register (often decisive for independents and cross-border structures)
6.1.4 Typical risk
The most frequent risk is a de facto shift into asset management: if the adviser starts acting as decision-maker, placing orders autonomously or holding trading powers of attorney, the activity may be reclassified as asset management.
6.2 Case B: “asset manager” entrepreneur (discretionary mandate)
6.2.1 Situation
An entrepreneur launches an asset management structure:
- receives discretionary mandates (clients delegate investment decisions)
- defines and executes the strategy within agreed parameters (risk profile, limits, investment universe)
- works with a custodian bank for execution and safekeeping
6.2.2 Regulatory qualification
- FinSA: yes, as portfolio management is a financial service subject to rules of conduct
- FinIA: very likely, as discretionary asset management is precisely the activity that triggers authorisation as an asset manager (depending on scope and structure)
6.2.3 Practical implications
- authorisation and organisational requirements (governance, internal controls, risk management, compliance)
- affiliation with a supervisory organisation (depending on category)
- enhanced AML/KYC requirements within the ecosystem (often in interaction with SROs, custodian banks and internal processes)
- significantly higher cost, time and complexity of compliance compared to a pure advisory model
6.2.4 Practical advantage
An authorised and properly structured asset manager is often more “bankable” and more acceptable to professional counterparties, as it operates within an explicit prudential framework.
7. How to correctly qualify an activity before launching
7.1 Key qualification questions
- Do I provide personalised recommendations on financial instruments?
- Do I take investment decisions on behalf of the client?
- Do I execute orders or hold a power of attorney?
- What is the client profile (retail vs professional)?
- Is the service provider subject to prudential supervision? (if not, adviser registration may apply)
- Is there a cross-border dimension (foreign provider, Swiss clients, presence in Switzerland)?
7.2 Minimum compliance deliverables (often required)
- mandates and terms adapted to the service (advice vs management)
- client classification policy and onboarding documentation
- disclosure of costs, conflicts and retrocessions
- appropriate assessment procedures (profiling, appropriateness/suitability)
- evidence retention system (advice records, logs, confirmations)
- ombudsman affiliation
- adviser register analysis and, if applicable, registration file
- for asset management: FinIA structure (organisation chart, controls, risk management, compliance, supervisory organisation, etc.)
8. Conclusion: the right approach is ex ante qualification, not ex post correction
FinSA and FinIA impose a discipline that is easy to describe but demanding to implement: qualify the activity before launching it, then build the organisation, documentation and contracts consistently with that qualification.
The difference between a financial adviser and an asset manager does not lie in the job title, but in operational reality: who decides, who executes, and with what level of delegation. It is precisely this reality that determines whether only FinSA applies, or whether the combined FinSA + FinIA regime with authorization and supervision is triggered.
FAQ – FinSA, FinIA, FINMA and the Client Adviser Register
What is FinSA and what is it used for in practice?
FinSA (Financial Services Act) governs how financial services are provided to clients. Its primary objective is investor protection and it imposes rules of conduct, including disclosure of risks and costs, client classification, suitability or appropriateness assessments, documentation and traceability. FinSA applies whenever a provider offers financial services to clients in Switzerland, regardless of the legal form or size of the entity.
What is FinIA and how does it differ from FinSA?
FinIA (Financial Institutions Act) governs the status of financial service providers. It determines which activities require authorisation, which organisational requirements must be met, and which supervisory regime applies. In summary:
– FinSA = rules of conduct vis-à-vis clients
– FinIA = authorisation, internal organisation and prudential supervision
Can an entity be subject to FinSA without being subject to FinIA?
Yes. This is very common. An investment adviser who provides personalised recommendations without discretionary portfolio management is generally subject to FinSA, but not necessarily to FinIA. However, all FinSA conduct-of-business obligations must still be complied with.
When does FinIA apply?
FinIA applies when the activity carried out corresponds to that of a financial institution within the meaning of the law, for example discretionary asset management on behalf of clients. In such cases, authorisation is required and the entity is subject to prudential supervision, either directly or via a supervisory organisation.
What is the role of the FINMA in this framework?
FINMA is the Swiss financial market supervisory authority. It:
– grants authorisations required under FinIA
– supervises financial institutions (directly or indirectly)
– approves supervisory organisations, registration bodies and recognises certain FinSA-related entities
– publishes positions, circulars and FAQs clarifying the interpretation of the laws
FINMA is not a mere “register”: it controls the structural and prudential compliance of authorised entities.
What is the register of financial advisers?
The register of financial advisers (or client advisers) is an obligation introduced by FinSA. Its purpose is to ensure that certain individuals advising clients in Switzerland have:
– sufficient knowledge of FinSA rules of conduct
– adequate professional training
– professional liability insurance coverage (where applicable)
The register is maintained by approved registration bodies, not directly by FINMA.
Who must register in the adviser register?
In practice, registration mainly concerns:
– advisers acting for Swiss providers that are not subject to equivalent prudential supervision
– advisers of foreign financial service providers offering services in Switzerland
Advisers working for entities already subject to prudential supervision (banks, securities firms, authorised asset managers, etc.) are generally exempt, subject to the exact structure and role performed.
Must an independent “advisor” always register?
Very often, yes. An independent adviser who provides investment advice on financial instruments to clients in Switzerland and is not attached to a supervised entity generally must register. Qualification depends on several factors: contractual status, type of clients, presence in Switzerland and the exact nature of the services.
What is the regulatory difference between investment advice and asset management?
The key difference lies in decision-making authority:
– investment advice: the provider recommends; the client decides
– asset management: the client delegates investment decisions to the manager (discretionary mandate)
Investment advice generally falls under FinSA only, whereas discretionary asset management usually triggers FinIA, with authorisation and supervision requirements.
Does holding a power of attorney on a client account change the qualification?
Yes, potentially. A trading power of attorney—especially if used autonomously—can shift an advisory activity into de facto asset management. This is a major risk point that is frequently underestimated by entrepreneurs.
Is affiliation with an ombudsman mandatory?
In the vast majority of cases, yes. Providers subject to FinSA must be affiliated with a recognised ombudsman to allow for out-of-court dispute resolution with clients. Certain limited exceptions exist.
Are family offices subject to FinSA and FinIA?
It depends on the model:
– a single-family office, acting solely for one family and without commercial activity, may fall outside the scope
– a multi-family office, providing financial services to several clients, may fall under FinSA and, depending on the level of delegation, under FinIA
Qualification must always be assessed on a case-by-case basis.
Is a crypto-related activity automatically subject to FinSA or FinIA?
Not automatically. Everything depends on the nature of the service:
– advice on financial instruments within the meaning of the law
– discretionary asset management
– purely technological or operational activities
Some crypto activities clearly fall under FinSA/FinIA, while others are governed by different frameworks (notably AML legislation). Proper qualification is decisive.
What are the most common mistakes made by entrepreneurs at the outset?
The most frequent mistakes are:
– relying on marketing labels instead of the actual activity performed
– underestimating FinSA obligations (documentation, justification, processes)
– ignoring the adviser register issue
– starting operations before qualifying the applicable regulatory regime
– attempting to correct a non-compliant situation ex post
Should the activity be qualified before or after launch?
Always before. FinSA and FinIA impose an ex ante qualification approach. Correcting issues after launch is often more costly, riskier, and may lead to sanctions, banking restrictions or challenges to the business model.
When is it advisable to seek professional support?
As soon as a project involves:
– investment advice or asset management
– retail clients
– a new or cross-border entrepreneurial structure
– interaction with Swiss banks
Early support from a specialized fiduciary or regulatory adviser helps select the appropriate model (advice vs management), anticipate regulatory costs, and avoid structural errors that are difficult to remedy later.
