My Uncle: The Last of the Great Swiss Advisors

Last month, I flew to Geneva, Switzerland, where I grew up and to where I travel once a year to see my mother, my uncle and my cousins.

My mother’s 83-year-old brother – call him Francois – has been a global financial advisor for decades but it was only recently that I realized what he did, or what being a financial advisor in Switzerland entailed.

Many years ago, I remember occasionally coming to his smartly appointed office in the city’s banking district, and later his office on the Rue du Rhône, the city’s Fifth Avenue, with a prized view of the lake.

In his later working years, he worked out of his house. It was less expensive, he no longer had to bother with daily traffic, and faster computing power made it possible to execute trades from a home address. Also, it was a tax write-off.

I remember going into his basement and there, stretching for about 60 feet, were rows of filing cabinets. These represented the summary of his life’s work, which took him — business class — to China, Southeast Asia, Argentina and parts of Africa in search of companies in which to invest.

In the metal cabinets, there must have been thousands, maybe tens of thousands, of individual manila folders belonging to his many clients.

But on this last trip, the cabinets were gone, sold back to the office retailer or manufacturer and ready to begin a second-hand life in another office or basement. His two computer monitors were still up and running daily, but his desk was barer than I’d seen it in a long time.

I’d known he was closing up shop for the past two or three years as the Swiss government, under pressure from foreign governments and internal forces, has recently loosened bank secrecy laws in place since 1934. The laws were designed to protect the privacy of account owners.

U.S. and French regulators in particular were cracking down on wealthy citizens stashing money abroad as governments seek to close tax loopholes and boost revenue flowing into their domestic treasuries.

Swiss banks had agreed to divulge client information and the new transparency rules extended to advisors like my uncle.

As my uncle spends his final professional months returning assets to their rightful owners, I wonder if the end of the Swiss secrecy laws as we’ve known them represents the end of an aspect of a financial era.

Switzerland, while still very favorable compared with European neighbors in terms sheltering capital, is no longer the haven it used to be. But will traditions of discretion and service that defined the tiny and wealthy nation erode as well?

If you hear members of the older generation — that of my uncle and my mother who were born well before World War II — tell it, Switzerland and the rest of the world isn’t the same. There are too many foreigners, too many immigrants, and too many outsiders.

Indiscretion rules the day, “new money” spreads wealth only to show off, crooks like Bernard Madoff drive thousands to ruin, and left-leaning politicians raise taxes on the backs of business to pay for programs run by bloated government functionaries sinking Geneva further into debt. Crime is on the rise.

Service, civility, respect and conservatism are disappearing faster than Alpine glaciers receding under the heat of a warming planet, if you believe my uncle.

There’s anecdotal evidence for some of these points. Developers install outer doors with combination locks on residential buildings, people in the streets don’t have the same articulate command of language as they used to, and there are more Porsches in the parking garages than Fiats.

Yet, my uncle’s niece -- a lawyer with a prominent Geneva firm rapidly making a name for herself in trust and estate negotiations -- delivers a refreshing counterpoint to the latent bigotry exhibited by members of the generation that preceded ours.

Bureaucrats and foreigners working for international organizations bring in a lot more money into the city than they draw on in services, she points out.

Taxing the uber wealthy is designed to redistribute income to those with less — not quite people like you and me — but you get the point, she tells me.

Remember that the erosion of Swiss banking secrecy laws is also taking place within a broader context of new regulatory frameworks governing financial services.

The Basel Accords are designed to maintain capital standards for banks and the Solvency II regulatory framework, which kicked in Jan. 1, is designed to make sure insurers have enough capital to pay claims. Who benefits? Regular policyholders.

The superrich have always had enough more wealth that they know what do to with, courtesy of tax shelters and astute advisors.

That my financial advisor uncle has Tsarist leanings there can be no doubt: he named his son Nicolas and his daughter Alexandra.

I can’t say that I agree with everything he believes, of course. But I will say this for him: If he treated his clients as well as he does me on my visits, I’m not surprised he was the most profitable advisory in the city back in the late 1980s and early 1990s.

With about $750 million under management, the only overhead was him, his wife and office expenses. His profitability used to drive all the banks with whom he had securities clearing relationships absolutely nuts, he told me.

I know he had some very wealthy foreign clients, but I’ll never know who. He’s much too discreet to divulge any names.

And never once since setting up his own shop in Geneva in the 1960s, has he or his wife executed a false or improper transaction, he said.

In an era when supposed leaders commit billion-dollar fraud, and the Securities and Exchange Commission charges investment advisors of impropriety practically every week, ending a career with a spotless record is noteworthy. (Of course, if he had committed a professional indiscretion or two, I doubt the family would have heard about it anyway. Discretion would forbid it.)

If nothing else, Uncle Francois, a man of great taste and some wealth, has taught me more than enough about delivering exemplary service.

I wouldn’t be surprised if in the past he once or twice told his own children that they couldn’t stay with him because an important client was in town.

Certainly, when I stay with him I feel like I’m the only person that matters, which is maybe the case as his client roster dwindles by the week.

Whether it’s the use of his car to see my mother, preparing meals at home, taking me out to good restaurants, or making sure the bathroom linens are just right, the level of service and attention isn’t something I’m used to.

Advisors with a tradition of superior service often — though not always — harbor superior aesthetic taste and uncommon refinement.

All these traits are present in my uncle to a greater or lesser degree.

Clients who stayed the night enjoyed radiant heating under terracotta tile so comfortable it makes you want to dance around his house barefoot all day long.

They were welcomed into a living room with soaring vaulted ceilings, before sitting down in midcentury modern classic lounge furniture from Charles and Ray Eames and Poul Kjaeholm to stare at lithographs from Joan Miró and Georges Braque.

“Made in China” doesn’t refer to cheaply manufactured goods. In his home, two tables from one of the Chinese dynasties are, I’m told, several hundred years old.

My other astounding observation: Other than in the kitchen, and perhaps a pen or two in his office, there is no plastic in the house. Furniture is all made of metal, leather or fabric. Soap bars rest on wood dishes.

Nobody in my generation followed him into the business. We gravitated to medicine, law and the arts.

The only one that came close is his Ivy League-educated daughter, who worked on Wall Street for about a decade. She returned to Switzerland and married a dentist to live happily ever after in the mountains.

She always preferred architecture, and children, of which she has four.

Uncle Francois couldn’t even count on his son, still a bachelor, to carry on the family name. So, with governments all-around coming down wealthy foreigners sheltering capital in Switzerland, my uncle suddenly finds himself on the outs.

In my brief discussions with him about investing, I intimate that he’s built his philosophy on generally “going long,” staying away from what can best be described as financial esoterica, and that he has no interest in hedge funds.

Folks wedded to “two and 20,” or who take a 2 percent management fee and 20 percent of profits, aren’t doing you any favors — that’s the sense I get from him.

Even with the family discount, he’s way out of my league to send him my individual retirement account money. Besides, at 85 he’s done scouring the world for value buys.

I’ll never know if my Uncle Francois delivered superior returns after expenses to his customers. I don’t need to. Judging from how he treats me, I know that the service he delivered to his clients was second to none.

InsuranceNewsNet Senior Writer Cyril Tuohy has covered the financial services industry for more than 15 years. Cyril may be reached at [email protected].

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