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Julius Bär changes fee model as sector shifts to safer revenue sources

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Julius Bär changes fee model as sector shifts to safer revenue sources

Julius Bär Gruppe AG wants to move more of its wealth management clients to a fixed-fee rather than a per-transaction fee agreement for advisory services to keep pace with a shift to more stable revenue sources in the private banking sector, Reuters reported June 7.

Like other Swiss private banks, the group generated most of its wealth management income from fees on individual transactions. However, banks are now moving away from this pricing model given that a fixed fee-based agreement makes it easier for the banks to implement the European Union's second Markets in Financial Instruments Directive, or MiFID II, which requires them to make a clear distinction between the types of services a client is paying for.

Julius Bär could shift 80% to 90% of its customers onto the new pricing scheme, Philipp Rickenbacher, head of advisory solutions at the Swiss group, told Reuters. Commission and fee income account for approximately 60% of Julius Bär's operating income.