# Dual-Licensed Asset Manager Launch Plan ## FINMA (Switzerland) + SEC (United States) — Feasibility & Implementation Roadmap > **Operational build-out:** See companion roadmap `firm-launch-operations-roadmap.md` in this folder — covers internal tooling, marketing/content system, compliance docs, and the RM demo strategy. Strategy decision update: no post-termination non-compete found in current contract (pending lawyer verification), which shortens the timeline and enables immediate RM outreach post-resignation. --- ## 1. Executive Summary This document outlines the steps, timeline, costs, headcount, and regulatory requirements to launch a single Swiss asset management entity holding both a FINMA portfolio manager license and SEC RIA registration — serving Swiss, European, and US qualified clients from one platform under common ownership. **Chosen structure: Option B — single Swiss AG, dual-licensed (FINMA + SEC).** This is the most cost-efficient and operationally cleanest structure, enabled by the June 2025 FINMA-SEC agreement that lifted the SEC moratorium on Swiss-based RIA registrations. Options A (two Swiss entities) and C (Swiss + US LLC) remain documented in Section 3 as alternatives if regulatory isolation or trade allocation separation becomes preferred. **Bottom line up front:** This is feasible. The regulatory pathway is well-trodden, the SEC moratorium on Swiss-based RIA registrations was lifted in June 2025, and your existing experience at a firm with this exact dual-regulatory setup means you understand the operational realities. Estimated launch cost: CHF 175,000–265,000 (including CHF 100,000 locked-in capital). Annual operating cost: CHF 76,000–200,000/year (no founder salaries) or CHF 296,000–420,000/year (CHF 100k salary each). Break-even AUM depends heavily on the RM revenue share — at 0.8% gross fee with 60% to RMs (0.32% net to firm), break-even ranges from CHF 24M (no salaries, low opex) to CHF 131M (with salaries, high opex). Building direct client relationships is the critical path to profitability. Estimated timeline: 10–15 months (6 months preparation during non-compete + 4–8 months regulatory review and setup). --- ## 2. Key Assumptions Based on user clarification: | Parameter | Value | |-----------|-------| | **Strategies** | Long-only equity, fixed income, commodities. Potential future hedge fund strategies in pooled vehicles (AMCs/funds) at a later stage | | **Swiss client types** | Private individuals, trusts, foundations. Qualified investors with financial assets >USD 1M | | **US client types** | Qualified private individuals, possibly trusts/foundations. No retail clients | | **Structure** | Single Swiss AG, dual-licensed (FINMA + SEC) — Option B | | **Non-compete** | 6 months post-resignation. Can prepare but cannot contact clients/RMs | | **User experience** | Currently PM at asset manager with this exact dual-regulatory setup — deep operational knowledge | | **Current firm structure** | Two Swiss entities (both FINMA-licensed, one additionally SEC-registered). User employed by the SEC-registered entity. Option B simplifies to one entity. | **Regulatory implications of these choices:** - Long-only strategies = lower risk profile under FINMA (no derivatives/CCR complexity, simpler risk framework) - Qualified investors only = lighter FinSA conduct rules (appropriateness vs. suitability, reduced disclosure) - No US retail = no Form CRS retail-focused requirements complications; qualified client exemption under Rule 205-3 - Future pooled vehicles = may require upgrade to "manager of collective assets" license (Art. 24 FinIA, CHF 200,000 capital) at a later stage --- ## 3. Structural Options > **Option B (single Swiss AG, dual-licensed) is the default and recommended structure.** Options A and C are documented below as alternatives for reference, and in case specific factors (trade allocation, regulatory firewall, US client preference) make the two-entity structure preferable. See the Recommendation at the end of this section. ### What Changed: The SEC Moratorium and Why It Mattered **The historical problem (2018–2025):** The SEC's Division of Examinations imposed a moratorium in 2018 on processing new RIA registration applications from Swiss-based investment advisers. The root cause was NOT that a single entity couldn't hold both licenses — it was that the SEC couldn't satisfactorily examine Swiss entities. Two specific obstacles: 1. **Information access:** Swiss data protection law and FINMASA allowed FINMA to restrict information that FINMA-supervised entities could submit to foreign regulators. The SEC feared it couldn't get books and records (including client personal data) directly from Swiss RIAs. 2. **On-site examinations:** Swiss law (Art. 271 Swiss Criminal Code, FINMASA Arts. 42c/43) created uncertainty about whether SEC staff could conduct on-site inspections in Switzerland without going through formal administrative assistance channels. **The resolution (June 10, 2025):** FINMA and the SEC reached an agreement clarifying: - Swiss RIAs may transmit books and records (including personal data) **directly** to SEC staff, subject to defined requirements (Art. 42c FINMASA) - SEC may conduct **on-site examinations** in Switzerland, coordinated with FINMA (Art. 43 FINMASA) - International administrative assistance remains available as a fallback where direct transmission isn't possible **Why this enables Option B:** Before the moratorium, a Swiss entity *could* in principle register with the SEC (some did, pre-2018). During the moratorium, the *only* way to serve US clients from Switzerland was the two-entity structure: a US-domiciled entity registers with the SEC and delegates portfolio management to the Swiss FINMA-licensed entity via a participating affiliate arrangement. With the moratorium lifted, a single Swiss entity can again hold both the FINMA license and SEC registration directly. **Important caveat from Ropes & Gray (June 2025):** "We are not aware of any current intention by the SEC to formalize the specifics of its understanding with FINMA in any public agreement or memorandum, beyond the twin press releases." The arrangement is based on press releases and practical cooperation, not a binding bilateral treaty. This carries some political risk — a future SEC administration could theoretically reverse course. However, the UK precedent (moratorium lifted September 2020, still in effect) suggests durability. ### Will the Two-Entity Structure Become Rare? **Short answer: No, but the *reason* for having two entities shifts from necessity to preference.** Before June 2025, the two-entity structure was **forced** by the moratorium — there was no alternative. Now it becomes a **choice** driven by other factors: | Factor | Favors two entities | Favors single entity | |--------|---------------------|----------------------| | **Regulatory firewall** | ✅ SEC enforcement/finding doesn't contaminate FINMA entity | — | | **Liability isolation** | ✅ US litigation stays in the US entity | — | | **Trade allocation simplicity** | ✅ Each entity has only its own clients — no cross-jurisdictional allocation issue | — | | **US client preference** | ✅ Some US clients prefer a US-domiciled adviser (Option C) | — | | **Tax efficiency** | ✅/❌ Depends on structure and canton | ✅/❌ | | **Cost** | — | ✅ One incorporation, one governance set, one SO | | **Operational simplicity** | — | ✅ One set of books, one compliance program | | **Speed to launch** | — | ✅ One application track, not two | | **Personnel efficiency** | — | ✅ No need for separate CCO/legal entity overhead | | **Participating affiliate complexity** | — | ✅ No Unibanco letter arrangement needed | **Existing firms (like yours):** Firms that already have the two-entity structure won't rush to consolidate. Merging entities is expensive, requires FINMA change-of-circumstances approval, SEC Form ADV amendments, tax events, and client consent. The sunk cost of the existing structure plus the disruption of consolidation means most established firms will keep what they have. **New entrants:** Will lean toward Option B for cost and speed, unless their lawyers specifically advise otherwise (which they often will — see the trade allocation and liability issues below). The two-entity structure is likely to remain common among firms that grow large enough to justify the regulatory firewall, or that have US institutional clients who insist on a US-domiciled counterparty. ### The Trade Allocation Issue: A Core Concern for Option B **Your compliance team's position:** "We have to trade for US clients before international clients due to SEC regulation." **This is a misunderstanding of SEC rules.** Here's what's actually going on: #### What the SEC actually requires The SEC has **no rule** requiring US clients to be traded for before non-US clients. What the SEC requires is: 1. **Fiduciary duty (Section 206, Advisers Act):** The adviser must not favor its own interests over clients, and must not favor certain client accounts over others (e.g., higher-fee accounts over lower-fee accounts, proprietary accounts over client accounts). 2. **Fair allocation of aggregated trades:** When block orders are placed for multiple clients, allocation must be fair and equitable. Best practice: pre-trade allocation statements, pro rata allocation based on net asset value, no account systematically favored. Partial fills allocated pro rata. 3. **Anti-cherry-picking:** The SEC has brought numerous enforcement actions against advisers who allocated profitable trades to favored accounts and unprofitable trades to disfavored accounts. The concern is *systematic favoritism*, not sequencing. 4. **Disclosure consistency:** The adviser's Form ADV must disclose its allocation methodology, and actual practice must match disclosure. **What the SEC cares about:** That no client group is systematically disadvantaged. It does NOT prescribe an ordering (US first, or international first). In fact, systematically trading for US clients *first* could itself be a violation if it systematically disadvantages non-US clients. #### What FINMA/FinSA requires FinSA Art. 17: "Financial service providers shall uphold the principles of **good faith and equal treatment** when handling client orders." FinSO Art. 20 requires: - Client orders registered and allocated "immediately and correctly" - Comparable orders executed "in the sequence they are received" - When pooling orders: "the interests of the respective clients are safeguarded and **not impaired**" - No client disadvantaged in allocation **So FINMA has the same principle as the SEC:** equal treatment, no systematic disadvantage. Neither regulator prescribes that one nationality of client goes first. #### Why the two-entity structure "solves" this — and why Option B doesn't In the two-entity structure (your current setup): - Entity 1 (FINMA-licensed) has Swiss/international clients only - Entity 2 (SEC-registered) has US clients only - Each entity trades for its own clients within its own book - **No cross-jurisdictional allocation issue exists** — there's never a block trade where US and Swiss clients compete for the same shares - Trade allocation policies only need to satisfy one regulator's framework per entity In the single-entity structure (Option B): - ALL clients (US + Swiss + international) are in the same entity - Block trades pool US and non-US clients together - The allocation policy must satisfy **both** SEC and FINMA/FinSA simultaneously - Both regulators can examine the same trade allocation records - Any perception of favoring one nationality over the other triggers scrutiny from the *other* regulator **This is the real trade allocation risk in Option B:** Not that the SEC requires US-first, but that: - If you systematically allocate in a way that appears to favor US clients → FINMA/SO could flag a violation of FinSA equal treatment (Swiss clients disadvantaged) - If you systematically allocate in a way that appears to favor Swiss clients → SEC could flag a fiduciary duty violation (US clients disadvantaged) - You're caught between two regulators examining the same trades with different (but compatible) frameworks **The solution for Option B:** A **neutral, pre-trade, pro rata allocation methodology** applied identically to all clients regardless of nationality, with: - Pre-trade allocation statements (before order placement) - Pro rata allocation based on NAV or target weight - Rotation for partial fills (no account always first or last) - Documented exceptions with CCO approval - Full disclosure in Form ADV Part 2A AND in FinSA client documentation - Regular compliance reviews of allocation fairness across client groups This is entirely doable — many dual-registered firms do it. But it requires more sophisticated compliance infrastructure than the two-entity structure, where the problem doesn't exist. #### Your compliance team's likely reasoning The "US clients first" rule your compliance team cites is probably a **conservative internal policy**, not an SEC requirement. Likely origins: 1. **Conservative interpretation:** If US and non-US clients are in separate entities, and the US entity always trades its own clients first within its own book, there's no issue. But this got simplified to "US clients must be traded for first" as a blanket rule. 2. **Examination fear:** SEC examinations focus intensely on US client treatment. A conservative compliance team may have created a "US first" rule to eliminate any possible argument that US clients are disadvantaged — even though this isn't legally required. 3. **Two-entity artifact:** In the two-entity structure, the US entity naturally trades for its clients when those clients need trading. There's no "first" or "second" — they're separate books. The "US first" language may be a shorthand for "the US entity's trades happen in the US entity's book, which is separate." **In a single entity (Option B), a "US clients first" policy would actually be problematic** — it would create exactly the FINMA equal treatment risk your compliance team is (correctly) worried about triggering. ### Option B: Single Swiss Entity, Dual-Licensed (DEFAULT — Recommended) ``` ┌─────────────────────────────────────────┐ │ Swiss AG │ │ FINMA Portfolio Manager License │ │ + SEC RIA Registration │ │ │ │ Serves: All clients (Swiss + US) │ │ One set of employees, one platform │ └─────────────────────────────────────────┘ ``` **Pros:** - Simplest structure, lowest cost - One incorporation, one governance framework - One SO affiliation - SEC/FINMA agreement (June 2025) specifically contemplates this: "FINMA-supervised, SEC-registered investment advisers located in Switzerland" - True "same employees, same strategies" — no delegation complexity **Cons:** - Both regulators have jurisdiction over the same entity — an SEC examination finding could trigger FINMA notification - No regulatory firewall between US and non-US business - Single point of failure if either license is suspended - **Trade allocation complexity:** All clients in one book; allocation policy must satisfy both SEC and FINMA simultaneously (see analysis above) - **Dual examination exposure:** SEC and FINMA/SO can both audit the same trades, same records, same policies — potential for conflicting regulatory expectations - **Data handling complexity:** SEC wants direct access to books and records including personal data; FinSA/FADP has specific requirements on how client data is handled. In a single entity, ALL client data (US + Swiss) is subject to both regimes. ### Option A: Two Swiss Entities (Alternative — for regulatory isolation) ``` ┌─────────────────────────────┐ ┌─────────────────────────────┐ │ Entity 1: Swiss AG │ │ Entity 2: Swiss AG │ │ FINMA Portfolio Manager │ │ FINMA Portfolio Manager │ │ License │ │ License + SEC RIA │ │ │ │ Registration │ │ Serves: Swiss/non-US │ │ Serves: US clients │ │ clients │ │ │ │ PMs sit here │ │ Delegates PM to Entity 1 │ └──────────────┬──────────────┘ └──────────────┬──────────────┘ │ Common ownership │ └──────────────┬────────────────────┘ │ Delegation agreement Participating affiliate arrangement ``` **Pros:** - Regulatory isolation — SEC issues don't contaminate the FINMA entity - Entity 2 can be FINMA-licensed (needed if it manages assets from Switzerland) OR structured as pure advisory/delegating - Clean audit trail for each regulator - Participating affiliate arrangement allows shared PMs - **Trade allocation is clean:** Each entity has only its own clients; no cross-jurisdictional allocation issue **Cons:** - Two incorporations, two sets of governance documents - Two SO affiliations (or one if structured as group — see below) - Higher setup cost - Entity 2 may also need FINMA license if it has substance in Switzerland — potential regulatory duplication - **Participating affiliate complexity:** The Unibanco no-action letter arrangement requires specific representations, agent-for-service appointments, and SEC undertakings. Not difficult, but adds legal cost and ongoing compliance obligations. **Group supervision option:** If both entities are Swiss and under common ownership, they may qualify for FINMA group supervision (Art. 83 FinIO), which means FINMA supervises them directly rather than through the SO. This can reduce the SO duplication but increases direct FINMA oversight. **Cost premium over Option B:** ~CHF 30,000–60,000 additional (see Section 8D for detailed comparison) ### Option C: Swiss AG + US LLC (Alternative — for US-domiciled presence) ``` ┌─────────────────────────────┐ ┌─────────────────────────────┐ │ Entity 1: Swiss AG │ │ Entity 2: US LLC (Delaware)│ │ FINMA Portfolio Manager │ │ SEC RIA Registration │ │ License │ │ │ │ │ │ Contracts with US clients │ │ PMs sit here │ │ Delegates PM to Entity 1 │ │ All investment decisions │ │ US presence (registered │ │ │ │ agent, office if needed) │ └──────────────┬──────────────┘ └──────────────┬──────────────┘ │ Common ownership │ └──────────────┬────────────────────┘ │ Delegation agreement (Investment Sub-Advisory) Participating affiliate designation ``` **Pros:** - US entity in US jurisdiction — cleaner for US clients, US counsel can handle - Entity 2 does NOT need FINMA license (no Swiss substance required if structured correctly) - US bankruptcy/legal isolation - May be preferred by US clients who want a US-domiciled adviser - **Trade allocation is clean:** Same as Option A — separate books per entity **Cons:** - Two countries, two legal systems, two tax regimes - US LLC needs a US registered agent and potentially a US office/person - Transfer pricing / arm's-length delegation fee arrangements - More complex tax structuring (US effectively connected income, Swiss corporate tax) - SEC examination of US entity may require access to Swiss entity's records (delegation oversight) - **Participating affiliate arrangement required** (same as Option A) - **No FINMA-SEC cooperation agreement benefit directly:** The June 2025 agreement specifically contemplates Swiss-based, FINMA-supervised, SEC-registered entities. A US LLC is SEC-registered but not FINMA-supervised — the Swiss entity is FINMA-supervised but not SEC-registered. The SEC accesses the Swiss entity's records through its examination of the US LLC and the delegation arrangement, not through the FINMA-SEC agreement directly. ### Recommendation: Option B as Default **Option B (single Swiss AG, dual-licensed) is the recommended default structure.** It is the most cost-efficient (CHF 185K–285K to launch), fastest to operational (10–15 months), and operationally simplest (one entity, one platform, one set of employees, one compliance program). The June 2025 FINMA-SEC agreement specifically enables this structure, and your current firm already demonstrates that Swiss + EU clients can be served from a FINMA-licensed entity — Option B simply adds US clients to the same entity via SEC registration. **Options A and C remain documented as fallbacks** if any of the following become decisive: 1. Trade allocation complexity proves unacceptable — if you or your lawyers conclude that a unified pro rata allocation policy satisfying both regulators is too risky or operationally burdensome, separate books (Options A/C) eliminate the problem entirely. 2. Regulatory firewall becomes critical — if you anticipate SEC enforcement risk or US litigation exposure that could contaminate the Swiss business. 3. US clients insist on a US-domiciled adviser — some US institutional clients prefer contracting with a US entity. 4. The FINMA-SEC agreement is reversed — low probability but high impact; if this happens, Option B becomes unavailable and restructuring to Option A or C would be necessary. **The confirming decision with lawyers:** Rather than asking "which structure?", ask "is there any reason Option B won't work for our specific situation?" If the answer is no, proceed with Option B. If a specific concern is identified, evaluate whether it justifies the CHF 40K–100K+ premium of Options A or C. --- ## 4. Regulatory Requirements ### 4A. FINMA Portfolio Manager License (FinIA) **Legal basis:** Financial Institutions Act (FinIA), Art. 17–26; FinIO; FinIO-FINMA **What it authorizes:** Discretionary management of individual client portfolios on a commercial basis in/from Switzerland | Requirement | Detail | | ------------------------------------ | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | | **Legal form** | Swiss commercial enterprise (AG/GmbH), entered in commercial register | | **Minimum capital** | CHF 100,000, fully paid in cash, maintained at all times | | **Own funds** | ≥ 25% of fixed annual costs (capped at CHF 10M). Fixed costs = personnel (excl. voluntary bonuses), rent, depreciation, provisions. Professional indemnity insurance can cover up to 50% of own funds requirement | | **Qualified managers** | As a rule, minimum 2 qualified managers, fit & proper, with relevant education and typically 5+ years experience. Single manager possible in justified cases (small, low-complexity) | | **Risk management** | Must be independent of revenue functions if >5 FTE OR >CHF 2M gross income. At ≤5 FTE and non-high-risk: can be integrated. Long-only strategies with qualified clients = likely non-high-risk | | **Governance body** | Independent body (board) required if >10 FTE or >CHF 5M gross income (majority non-management) | | **AML framework** | Complete AML framework: risk analysis, KYC, monitoring, AML officer. Supervised through SO | | **Compliance** | Internal control system, compliance function (can be outsourced — >50% of firms do this) | | **Professional indemnity insurance** | Required. Must be with ISA-supervised insurer, min. 1-year term, 90-day notice period, 5-year tail. Amount scales with business model | | **Auditor** | Licensed audit firm required | | **Business plan** | 3-year financial projections (optimistic/realistic scenarios) | | **Swiss substance** | Registered office in Switzerland, Swiss-resident management, genuine operations | **Supervisory Organisation (SO):** Must affiliate with one of 4 FINMA-authorised SOs BEFORE filing with FINMA: | SO | Location | Contact | |----|----------|---------| | AOOS AG | Zurich (Clausiusstrasse 50, 8006) | info@aoos.ch, +41 44 215 98 98 | | OSIF | Geneva (Rue de Rive 8, 1211) | welcome@osif.ch, +41 22 580 39 39 | | OSFINcontrol AG | Zug (General-Guisan-Str. 6, 6300) | info@osfincontrol.ch, +41 41 767 36 00 | | SO-FIT | Geneva (Rue Pedro-Meylan 2, 1208) | info@so-fit.ch, +41 22 700 73 20 | The SO reviews the application first, confirms affiliation, then the file goes to FINMA. SO also conducts ongoing supervision (risk-based audits). **Application process (electronic via EHP platform):** 1. Self-registration on FINMA website → get EHP access (2FA) 2. Complete application in EHP 3. Select SO, transmit application to SO via EHP 4. SO reviews, confirms affiliation 5. Transmit application + SO confirmation to FINMA via EHP 6. FINMA review (4–8 months from complete file) **Timeline:** 4–8 months from complete file (SO review + FINMA). Can extend to 12–18 months with incomplete files or follow-up questions. **FINMA fees:** ~CHF 5,000 application fee. Annual supervisory levy collected via SO. --- ### 4B. SEC RIA Registration **Legal basis:** Investment Advisers Act of 1940, Section 203; Rule 203-1; Rule 203A-1 **What it authorizes:** Providing investment advice to US clients (including cross-border from Switzerland) **Key development (June 2025):** SEC resumed processing Swiss-based RIA registration applications after multi-year moratorium. FINMA and SEC agreed on examination modalities — direct information transmission (Art. 42c FINMASA) and on-site visits (Art. 43 FINMASA). This was a prerequisite and is now resolved. | Requirement | Detail | |-------------|--------| | **AUM threshold** | Must have RAUM ≥ $100M to register with SEC (or use 120-day rule under Rule 203A-2(c) if reasonably expect $100M within 120 days). Below $25M = prohibited from SEC registration | | **Form ADV Part 1A** | Electronic filing via IARD. Firm info, ownership, disciplinary history, business practices | | **Form ADV Part 2A** | Brochure (disclosure document). Business practices, fees, conflicts of interest. Filed electronically via IARD | | **Form ADV Part 3** | Form CRS (client relationship summary). Required for retail clients — but since you're serving qualified clients only, this may have limited applicability (still required at registration) | | **Form ADV-NR** | For non-resident general partners/managing agents. Designates SEC Secretary as agent for service of process | | **CCO** | Must designate Chief Compliance Officer under Rule 206(4)-7. CCO must be knowledgeable re: Advisers Act, empowered, sufficient seniority. Can be same person as FINMA compliance officer if qualified for both | | **Compliance program** | Written policies & procedures reasonably designed to prevent violations of Advisers Act. Annual review required | | **Books and records** | Rule 204-2. Detailed recordkeeping requirements | | **Code of ethics** | Rule 204A-1. Personal trading restrictions, reporting | | **Custody rule** | Rule 206(4)-2. Since you're a discretionary manager (not holding client assets), this is simpler — assets stay at custodian bank | | **No minimum capital** | SEC RIA has no statutory minimum capital (unlike FINMA). But Form ADV requires financial statement showing ability to operate | | **State notice filings** | Most states require notice filing + fee if doing business in that state. Filed through IARD. Fees ~$100–500/state | **SEC review timeline:** 45 days from filing to grant or institute denial proceedings. In practice, for Swiss-based advisers resuming under the new arrangement, expect 45–90 days if the file is clean. **IARD fees:** - Initial registration: $225 (for $100M+ AUM) - Annual updating amendment: $225 - No fee for other amendments or Form ADV-W **Participating affiliate concept:** Not applicable under Option B (single entity). The PMs are employees of the SEC-registered entity directly. This concept only applies if a two-entity structure (Option A or C) is adopted, where personnel of the non-SEC-registered affiliate provide advisory services through the SEC-registered entity. --- ### 4C. Interaction Between FINMA and SEC Under Option B (Single Entity) In the single-entity structure, both regulators have direct jurisdiction over the same entity. Key interaction points: 1. **Information sharing:** FINMA can provide administrative assistance to SEC under Art. 42c FINMASA (direct transmission) and Art. 43 FINMASA (on-site examinations). The June 2025 agreement established that the Swiss entity transmits books and records directly to SEC staff, with FINMA informed. This is the basis on which Option B is now possible. 2. **Dual examinations:** SEC can conduct on-site visits in Switzerland at the entity's office. FINMA is informed and coordinates. Both regulators can examine the same entity, the same trades, the same compliance program, the same records. This is the core trade-off of Option B — you accept dual examination exposure in exchange for structural simplicity. 3. **Trade allocation scrutiny:** Because all clients (US + Swiss + EU) are in one book, both regulators examine the same trade allocation records. The allocation policy must satisfy both SEC fiduciary duty / fair allocation requirements AND FinSA equal treatment obligations (Art. 17, Art. 20 FinSO) simultaneously. A neutral, pre-trade, pro rata allocation methodology applied identically to all clients regardless of nationality is the solution (see Section 3, Trade Allocation Issue). 4. **Data handling:** SEC wants direct access to books and records including personal data of ALL clients. In a single entity, ALL client data (US + Swiss + EU) is subject to both SEC books-and-records rules (Rule 204-2) and Swiss FADP. The FINMA-SEC agreement resolved the principal conflict, but operational data handling protocols must be carefully designed — particularly regarding any EU client data that may implicate GDPR if the EU client base grows. 5. **Change notifications:** Material changes must be reported to BOTH regulators. Ownership changes, strategy changes, key personnel changes — both FINMA (via SO) and SEC (via Form ADV amendment) must be notified. In practice, this means maintaining a dual notification calendar. 6. **Compliance program:** One compliance program must address both FINMA/FinSA and SEC/Advisers Act requirements. The CCO (Rule 206(4)-7) and the compliance officer / AML officer (FinIA/FinSA/AMLA) can be the same person if qualified for both regimes. The compliance manual should be structured with clearly delineated sections for each regulatory regime, plus an integrated section covering areas of overlap (trade allocation, conflicts of interest, client classification, data protection). --- ## 5. Document Inventory ### 5A. Available Directly from the Regulator **FINMA / Swiss authorities:** | Document | Source | Notes | |----------|--------|-------| | Licensing form for FinIA institutions | FINMA website (EHP platform / PDF template) | The actual application form, available for download | | FinIA (SR 954.1) | fedlex.admin.ch | The statute itself | | FinIO (SR 954.11) | fedlex.admin.ch | The ordinance | | FinIO-FINMA | FINMA website | FINMA's implementing ordinance | | FinSA (SR 951) | fedlex.admin.ch | Financial Services Act — conduct rules | | FinSO | fedlex.admin.ch | FinSA ordinance | | AMLA (SR 955.0) | fedlex.admin.ch | Anti-Money Laundering Act | | List of authorised SOs | FINMA website (PDF) | Current list, updated regularly | | FINMA Guidance 01/2024 | FINMA website | Supervisory expectations for portfolio managers | | FINMA circulars (e.g., operational risk, outsourcing) | FINMA website | Regulatory guidance | | EHP self-registration | FINMA website | Online portal access | | Commercial register forms | cantonal commercial register office | For AG/GmbH incorporation | **SEC / US authorities:** | Document | Source | Notes | |----------|--------|-------| | Form ADV (Part 1A, 2A, 3) + instructions | sec.gov | The registration form with detailed instructions | | Form ADV-NR | sec.gov | Non-resident designation form | | Form ADV-W | sec.gov | Withdrawal form (if needed) | | IARD Entitlement Package | finra.org (IARD website) | Account setup for electronic filing | | Advisers Act of 1940 | sec.gov / law.cornell.edu | The statute | | SEC rules under Advisers Act | eCFR (ecfr.gov) | Rule 206(4)-7 (compliance), 204-2 (books/records), 204A-1 (ethics), 206(4)-2 (custody), etc. | | SEC compliance guide for advisers | sec.gov | "Questions Advisers Should Ask" — practical guidance | | OCIE Risk Alert on compliance programs | sec.gov | Examination focus areas | | Rule 205-3 (qualified client definition) | eCFR | Defines qualified client threshold ($1M+ AUM) | | IARD filing fee schedule | sec.gov | Fee table by AUM tier | --- ### 5B. Must Be Prepared by / Heavily Involving Lawyer These documents require legal expertise, regulatory interpretation, or formal legal acts that cannot be done without a qualified attorney. **Swiss side (requires Swiss attorney / notary):** | Document | Why lawyer is needed | Est. cost | |----------|---------------------|-----------| | **Articles of association (Statuten)** | Must be notarized by Swiss notary for AG incorporation. Must contain FINMA-compliant purpose clause, geographic description of activities. Art. 718 OR requirements. | CHF 2,000–5,000 (included in formation) | | **FINMA application dossier** (submitted via EHP) | The formal application requires legal assessment of fit & proper, regulatory qualification of managers, organizational adequacy. The SO will scrutinize the legal quality. | CHF 15,000–30,000 | | **Fit & proper declarations** | Regulatory statements by managers and board members — these are legal declarations to FINMA with consequences for misstatement. | Included in application dossier cost | | **Delegation/investment management agreement** | Not needed under Option B (single entity). Only relevant if Options A or C are adopted. | — (Option B) / CHF 5,000–15,000 (Options A/C) | | **Custodian bank agreement** | Standardized by banks but needs legal review for regulatory compliance (FinSA, FINMA requirements) | CHF 2,000–5,000 (review) | | **Shareholders' agreement** | Between owners — governance, transfer restrictions, exit provisions. | CHF 5,000–15,000 | | **Employment contracts** (with non-compete clauses) | Must be properly drafted under Swiss employment law. Non-compete must meet Art. 340 CO requirements (written, reasonable scope/duration/territory). | CHF 3,000–8,000 | | **SO affiliation agreement** | Contractual terms with the supervisory organisation. Usually the SO's standard form but reviewed by counsel. | CHF 1,000–3,000 (review) | | **Legal opinion on regulatory status** | Confirms that the single-entity dual-license structure is appropriate for the planned activities, and that no "manager of collective assets" upgrade is needed at launch. Also confirms FinSA cross-border treatment of EU clients. | CHF 5,000–15,000 | | **Data protection / cross-border data transfer analysis** | FINMA-SEC information sharing, client data transfers to US. Requires legal assessment under Swiss FADP and potential US privacy laws. | CHF 3,000–10,000 | **US side (requires US securities lawyer):** | Document | Why lawyer is needed | Est. cost | |----------|---------------------|-----------| | **Form ADV Part 1A** (filing) | Factual but requires understanding of regulatory definitions (control persons, disciplinary events, regulatory assets under management calculation). Errors can trigger SEC scrutiny. | $5,000–15,000 | | **SEC compliance program** (review/finalization) | Must be tailored to the Advisers Act and the firm's specific business. Lawyer must review for adequacy under Rule 206(4)-7. | $5,000–15,000 (review) | | **Form CRS / Part 3** | Short but prescribed format. Legal review needed. | $1,000–3,000 | | **State notice filings** | State-specific requirements. | $500–2,000 (plus state fees) | | **Investment management agreements** (US client contracts) | Must comply with Advisers Act, include required disclosures, arbitration provisions if applicable. | $5,000–15,000 | | **Participating affiliate designation** | Not needed under Option B (single entity, PMs are employees of the SEC-registered entity directly). Only relevant for Options A or C. | — (Option B) / $3,000–10,000 (Options A/C) | | **US tax structuring** (if US entity) | Not applicable under Option B (Swiss entity only). Only relevant for Option C. | — (Option B) / $5,000–15,000 (Option C) | --- ### 5C. Can Be AI-Drafted for Lawyer Review These documents are substantial in volume but follow established templates and regulatory guidance. AI can produce a strong first draft that a lawyer reviews and finalizes, significantly reducing legal costs. | Document | AI drafting feasibility | Lawyer review required | Notes | |----------|------------------------|----------------------|-------| | **Business plan** (3-year financial projections) | ★★★★★ | Light review | Standard format. FINMA wants optimistic + realistic scenarios. Can be generated from template + your input on cost assumptions | | **Risk management framework / guidelines** | ★★★★☆ | Moderate review | Follows FINMA guidance. Must define risk tolerance, risk categories, escalation procedures. Long-only strategies = simpler framework | | **Internal control policies** | ★★★★☆ | Moderate review | Segregation of duties, transaction controls, reporting lines. Template-driven | | **Compliance manual (integrated FINMA + SEC)** | ★★★★☆ | Moderate review | Single manual covering both regimes: FinSA conduct rules + Advisers Act fiduciary duty, suitability/appropriateness for qualified clients, AML procedures, conflict of interest management, trade allocation policy (pro rata, pre-trade, nationality-neutral). Structured with clearly delineated sections per regime plus integrated overlap sections | | **AML framework** (risk analysis, KYC, monitoring) | ★★★★☆ | Moderate review | Follows AMLA + FINMA guidance. Must include client risk classification, source-of-funds verification, PEP screening, transaction monitoring | | **Form ADV Part 2A** (brochure) | ★★★★★ | Moderate review | Narrative disclosure document. SEC provides detailed instructions on required items. AI can draft from firm information | | **Investment process documentation** | ★★★★★ | Light review | Your domain expertise + AI structuring. Describes strategy, asset allocation framework, security selection, rebalancing | | **Client onboarding procedures** | ★★★★☆ | Light review | KYC workflow, suitability assessment, mandate documentation, FinSA disclosure delivery | | **IT security / data protection policies** | ★★★★☆ | Moderate review | Follows ISO 27000 / Swiss FADP. Template-driven | | **Outsourcing policies** | ★★★★☆ | Moderate review | FINMA outsourcing circular requirements. Must cover due diligence, ongoing monitoring, exit strategies | | **Code of ethics** (SEC Rule 204A-1) | ★★★★★ | Light review | Personal trading, gift policies, political contributions, whistleblower. SEC rule specifies required elements | | **Conflicts of interest register** | ★★★★☆ | Moderate review | Identification, classification, mitigation measures. Living document | | **Trade allocation policy** (dual-regime) | ★★★★☆ | Heavy review | Pre-trade allocation statements, pro rata methodology based on NAV, partial fill rotation, documented exceptions with CCO approval. Must satisfy both SEC fiduciary duty / anti-cherry-picking AND FinSA Art. 17/Art. 20 equal treatment. Nationality-neutral. Disclosed in Form ADV Part 2A AND FinSA client documentation. **This is the most compliance-critical document under Option B** | | **Disaster recovery / business continuity plan** | ★★★★☆ | Light review | Standard template, firm-specific details | | **Investment restrictions / guidelines** (per mandate type) | ★★★★★ | Light review | Your expertise. Define eligible assets, concentration limits, leverage limits | | **Data processing agreements** (with vendors) | ★★★★☆ | Moderate review | Template-driven, Swiss FADP compliant | | **Minutes templates / governance documentation** | ★★★★☆ | Light review | Board minutes, management decisions, compliance committee minutes | **Estimated cost savings from AI drafting:** If a lawyer were to draft all of the above from scratch, estimated cost would be CHF 40,000–80,000. With AI-drafted first versions requiring lawyer review only, estimated cost: CHF 10,000–25,000. **Savings: CHF 30,000–55,000.** --- ## 6. Headcount, Roles, and Compensation ### 6A. The Strict Regulatory Minimum **There is no statutory minimum headcount for a FINMA portfolio manager.** The law requires *qualified managers* and *functions* (risk, compliance, AML), not a headcount. A firm with 2 people can be licensed if those 2 people collectively satisfy all function requirements. **There is no statutory minimum headcount for an SEC RIA.** The SEC requires a CCO and supervised persons, but no minimum number. **The real constraint is functional, not numerical:** FINMA and the SEC require that certain *functions* exist and are adequately performed. Whether those functions are performed by 2 people or 10 depends on whether the role combinations create unacceptable conflicts. ### 6B. FINMA Requirements — Qualified Managers (Art. 20 FinIA, Art. 25 FinIO) | Requirement | Detail | |-------------|--------| | **Minimum number** | As a rule, **at least 2 qualified managers** (Art. 20(1) FinIA). Single manager possible in justified cases (small, low-complexity) — but this is the exception, not the rule | | **Professional experience** | **5+ years** in portfolio management for third parties (Art. 25(1)(a) FinIO) | | **Training** | At least **40 hours** of training in portfolio management for third parties (Art. 25(1)(b) FinIO). This is a formal training requirement — typically satisfied through recognized certifications, courses, or continuing education programs | | **Continuing professional development** | Regular CPD required to maintain skills (Art. 25(3) FinIO) | | **Fit & proper** | Good reputation, irreproachable business conduct, no criminal record, no regulatory sanctions (Art. 11(1)-(2) FinIA) | | **Domicile** | Managers must be resident at a place from which management can actually be exercised. At least one board member (if AG) must be Swiss-resident with signatory power (Art. 718(4) OR) | | **Exemptions** | FINMA may grant exemptions from training/experience requirements where there are legitimate grounds (Art. 25(2) FinIO) — but this is discretionary and not guaranteed | **What qualifies as "5 years professional experience in portfolio management for third parties":** - Discretionary portfolio management for clients (not proprietary trading) - Working as a PM, investment manager, or similar role at a regulated asset manager, bank, or fund management company - Your current role as PM at your current employer qualifies **What qualifies as "40 hours training":** - Recognized asset management certifications (CFA, CIWM, CIIA, Swiss certified asset manager / " Vermögensverwalter mit FAA") - Formal continuing education courses in portfolio management, risk management, compliance - FINMA recognizes various Swiss and international qualifications — the SO and FINMA assess adequacy during the application **For your brother:** He would need to independently meet the 5+ years experience and 40 hours training requirements. If he doesn't have portfolio management experience, he may not qualify as a "qualified manager" — though FINMA can grant exemptions (Art. 25(2) FinIO). Alternatively, he could serve in a non-qualified-manager role (operations, client service, business development) while you serve as the primary qualified manager, with PM #2 being a separate hire. ### 6C. FINMA Requirements — Risk, Compliance, and AML Functions | Function | When required | Can be combined with PM role? | Can be outsourced? | |----------|--------------|------------------------------|-------------------| | **Risk management** | Always required (Art. 26(1) FinIO) | ✅ Yes, if ≤5 FTE AND ≤CHF 2M gross income AND non-high-risk business model (Art. 26(2) FinIO) | ✅ Yes — can delegate to external provider | | **Internal control / compliance** | Always required (Art. 9, 21 FinIA) | ✅ Yes, under same conditions as risk management | ✅ Yes — >50% of firms outsource | | **AML officer** | Always required (AMLA) | ✅ Yes — no explicit independence requirement at small scale | ✅ Yes — can be external | | **Internal audit** | Only if >CHF 10M gross income (Art. 26(4) FinIO) | N/A at startup scale | ✅ Yes | | **Governance body (board)** | Required if >10 FTE or >CHF 5M gross income (Art. 23(3) FinIO) | N/A at startup scale — but board recommended for governance even if not required | No — must be real people | **The critical threshold for a 2-person startup:** At ≤5 FTE and ≤CHF 2M gross income with a non-high-risk business model (long-only, qualified clients), risk management and compliance **do not need to be independent of revenue functions**. This means you and your brother can serve as PMs AND cover risk/compliance/AML, subject to: - Documented internal controls (segregation of duties within the 2-person team) - Written risk management guidelines and risk tolerance definitions - AML framework with KYC, monitoring, and reporting procedures - The SO assessing and accepting the arrangement **Long-only strategies with qualified clients = likely non-high-risk**, which is the key enabler for the lean 2-person structure. **FINMA's caveat (Guidance 01/2024):** Even below the 5 FTE threshold, FINMA may require separation of risk/compliance from revenue functions if the business model is high-risk. Your business model (long-only, no derivatives, qualified clients, no retail) is designed to avoid this. ### 6D. SEC Requirements — CCO and Compliance Program | Requirement | Detail | |-------------|--------| | **CCO designation** | Must designate one individual (a supervised person) as CCO under Rule 206(4)-7(c) | | **CCO qualifications** | "Competent and knowledgeable regarding the Advisers Act," "empowered with full responsibility and authority," "sufficient seniority and authority within the organization" | | **CCO can have other roles** | ✅ Yes — SEC explicitly recognizes that CCOs at small firms wear multiple hats. The SEC's own guidance for small/newly-registered advisers notes "employees performing multiple functions/serving in multiple capacities, including the possibility of having a part time CCO" | | **CCO can be a PM** | ✅ Yes — but the SEC flags this as a risk area. The SEC has observed that "CCOs who had numerous other professional responsibilities... did not appear to devote sufficient time to fulfilling their responsibilities as CCO." The key is that the CCO must actually have time, authority, and resources. At a 2-person firm, one of you would be CCO and PM — this is common at startup RIAs but scrutinized in examinations | | **CCO can be outsourced** | Technically yes — the CCO must be a "supervised person," which can include a consultant. But the SEC has observed problems with off-site CCOs who "are not on-site enough to effectively monitor compliance." For a startup, an external CCO is viable but should be engaged for meaningful hours, not just a name on a form | | **No minimum salary for CCO** | The SEC does not regulate compensation levels. But the SEC examines whether the CCO has "sufficient resources" — a CCO paid zero may raise questions about whether they can effectively perform the role | | **Compliance program** | Written policies and procedures, annual review. No prescribed format — must be tailored to the firm's business and risks | **SEC enforcement risk for CCOs:** The SEC has brought enforcement actions against CCOs personally under Rule 206(4)-7, particularly where the CCO also held other senior roles (CEO, PM, CFO). The risk is real but manageable if the compliance program is genuine, documented, and followed. An under-resourced or purely nominal CCO is a red flag. ### 6E. Your Experience Profile **Your background:** 5 years as a trader at a bank + 2 years as a portfolio manager at your current firm. **FINMA qualified manager assessment (Art. 25 FinIO):** The statute requires 5 years experience "in portfolio management for third parties." Your 5 years as a bank trader is not literally "portfolio management for third parties" — trading and portfolio management are legally distinct activities. However: 1. **FINMA exemption (Art. 25(2) FinIO):** FINMA may grant exemptions "where there are legitimate grounds." Five years of trading at a regulated bank + 2 years as PM = 7 years in financial markets with direct securities and risk experience. This is a strong exemption case. 2. **Your current firm hired you as PM with no prior PM experience** — either FINMA/your SO accepted your trading background as equivalent (via Art. 25(2) exemption), or you were employed as PM but not formally designated as a "qualified manager." Check with your compliance/HR which applies. 3. **SO practice is more flexible than the statute:** Trading experience at a regulated bank, particularly if it involved discretionary decisions, is often treated as substantially equivalent by SOs. **The 40 hours training requirement:** Likely satisfied through CFA, banking certifications, or formal continuing education. The SO assesses this during the application. **Bottom line:** You almost certainly qualify as a qualified manager, either directly (2 years PM + exemption for 5 years trading) or through the exemption mechanism. Your Swiss regulatory lawyer should frame your experience profile to maximize the case for equivalence in the application dossier. ### 6F. Your Brother's Experience Profile **Your brother has no experience in the financial industry.** This means: - ❌ He **cannot be a qualified manager** under FinIA — no 5 years portfolio management experience, no 40 hours training, no exemption grounds (Art. 25(2) is for cases like "trading instead of PM," not "0 years financial experience") - ❌ He **cannot make discretionary investment decisions for clients** — this is the core regulated activity under FinIA - ❌ He **cannot be CCO (SEC)** — the SEC requires the CCO to be "competent and knowledgeable regarding the Advisers Act" with "sufficient seniority and authority" - ✅ He **can serve as board member** — no experience requirement below 10 FTE / CHF 5M threshold. Must be fit & proper - ✅ He **can handle operations, client service, business development** — no regulatory qualification needed - ✅ He **can serve as a client adviser** under FinSA — client advisers of FINMA-licensed portfolio managers don't need separate registration (FinSA Art. 28 exemption for supervised institutions) **No compliance training is needed at launch** if the external firm handles all compliance functions (see Section 6H). Your brother's role is operations, not compliance. If you later want him to take on compliance responsibilities, that's a Year 2+ decision (see Section 6K). ### 6G. The Part-Time Qualified Manager **Your brother cannot serve as the second qualified manager.** Rather than risk the single-qualified-manager exception (Art. 20(1) FinIA — uncertain SO/FINMA acceptance, ~40% approval probability), the plan is to engage a **part-time qualified manager** as the second person on the management body. **There is no statutory minimum working percentage for a qualified manager.** Neither FinIA, FinIO, nor FinIO-FINMA specifies a minimum FTE percentage or hours. The requirement is that the person: - Is formally appointed as a board member with management responsibility - Actually participates in management decisions (board meetings, strategic decisions, review of investment process) - Is available for SO/FINMA queries - Has real knowledge of the firm's business — not just a name on a form - Can step in if the primary manager is incapacitated (Art. 25(4) FinIO — business continuity) - Is Swiss-resident **FINMA's concern (Guidance 01/2024):** "A nominee-director structure — where directors lend their names but exercise no real oversight — will not satisfy the adequate organisation test." The person must be genuinely involved. **Practical commitment:** ~10–20% FTE (4–8 hours/week). This is defensible for a small, low-risk firm with long-only strategies and qualified clients. **What this person actually does:** | Activity | Frequency | Time | |----------|-----------|------| | Board meeting (strategic decisions, business review) | Monthly | 2–3 hours | | Investment process review (portfolio decisions, strategy adherence) | Monthly or quarterly | 1–2 hours | | Compliance program review (with external firm's reports) | Quarterly | 1–2 hours | | SO/FINMA liaison (if needed) | As needed | 1–2 hours | | Available for ad hoc management decisions | As needed | Variable | | Annual review participation | Annual | 2–4 hours | **Who this person could be:** | Profile | Cost (annual) | Notes | |---------|--------------|-------| | Retired PM from your network | CHF 10,000–20,000 | Best value. Must not be from current employer (non-compete). Must be Swiss-resident, fit & proper, 5+ years PM experience | | PM at another firm (side mandate) | CHF 15,000–30,000 | Needs employer consent. Conflict of interest if employer is competitor | | Professional board member / consultant | CHF 20,000–40,000 | Most expensive, lowest risk. Professional, understands the role | | Compliance/risk consultant who also qualifies as PM | CHF 20,000–35,000 | Could combine qualified manager + compliance advisory — efficient but hard to find | **Structure:** Board mandate (Auftragsvereinbarung), not employment contract. No social security complications. Board fee commensurate with ~10–20% time commitment. **Timeline:** Identify and approach this person during the non-compete period. Conversations with potential board members are not client contact — they're permitted. Have the arrangement ready before the FINMA application is submitted. ### 6H. External Compliance Outsourcing **The external firm handles all FINMA compliance, AML, and risk management functions.** This is the standard model for small FINMA-licensed portfolio managers — >50% of firms outsource compliance, and the industry trend is toward more outsourcing (only 7.5% of EAMs don't consider any outsourcing, per SWA 2024 study). **What the external firm does:** | Service | What they do | Regulatory function served | |---------|-------------|---------------------------| | **AML officer role** | Maintain AML risk analysis, run KYC/onboarding checks, transaction monitoring, suspicious activity reporting to MROS | FINMA/AMLA AML officer | | **Compliance function** | Maintain compliance policies, monitor adherence, conduct compliance training, handle FinSA conduct rules, cross-border compliance | FINMA compliance function (Art. 9, 21 FinIA) | | **Risk management** | Maintain ICS (internal control system), risk matrix, risk analysis, quarterly risk reporting to board | FINMA risk management (Art. 26 FinIO) | | **SO liaison** | Point of contact for SO. Prepare for SO audits. Present during audit. Handle SO queries | Ongoing supervisory relationship | | **Regulatory updates** | Monitor regulatory changes, update policies and procedures | Ongoing compliance obligation | | **Board reporting** | Quarterly compliance and risk report at board meetings | Board oversight requirement | | **KYC / onboarding support** | Review client onboarding files, risk classifications, source-of-wealth documentation | AMLA requirement | | **Transaction monitoring** | Monitor transactions for AML red flags, market conduct, mandate compliance | Ongoing AML and compliance obligation | | **ICS maintenance** | Internal control system documentation, control plan, risk and control matrix | FINMA organizational requirement | | **Audit preparation** | Prepare documentation, liaise with SO's audit firm, participate in audit | Annual or risk-based regulatory audit | **What you still do yourself (cannot be outsourced):** | Task | Who | Why | |------|-----|-----| | **CCO designation (SEC)** | You | SEC requires CCO to be a "supervised person" of the firm — not an external consultant | | **CCO annual review** | You (with external firm support) | Rule 206(4)-7. External firm prepares review; you sign off | | **Form ADV updates** | You (with external firm support) | SEC registration is your responsibility. External firm drafts amendments | | **Trade allocation oversight** | You (with external firm monitoring) | You're the PM making trades. External firm monitors for fairness. You review and sign off | | **Board decisions** | You + brother + part-time qualified manager | Management decisions cannot be delegated | | **Investment decisions** | You | Core business — cannot be outsourced | **Providers:** | Provider | Profile | Estimated cost (small firm) | Notes | |----------|---------|----------------------------|-------| | **SwissComply** | Specialized compliance outsourcing for independent asset managers. Lawyers and specialists. Offers "body lending" and ICS software platform | CHF 15,000–30,000/year | What your current firm uses. Focused on asset managers | | **Goldblum** | Boutique regulatory firm. Retained compliance function including AML officer. Explicitly targets "firms too small to justify a full internal compliance department" | CHF 10,000–25,000/year | Quotes in writing against your profile. Also does FINMA licensing | | **BDO** | Big-4 accounting firm. Modular outsourcing — pick services. Digital regulatory monitoring tool | CHF 15,000–35,000/year | More resources, brand recognition | | **Grant Thornton** | Mid-tier. Modular compliance and risk outsourcing | CHF 12,000–30,000/year | Potentially cheaper than BDO | | **SO's own compliance service** | Some SOs offer compliance support alongside supervisory role | CHF 8,000–20,000/year | Potentially cheapest. Check conflict of interest (supervisor also providing compliance?) | None publish standard price lists — all quote against your specific profile. Contact 2–3 during the non-compete period for written quotes. ### 6I. Working Without Salary — Legal Analysis **Short answer: Yes, it's legal, but the structure matters.** There are two distinct legal relationships in a Swiss AG owned and operated by founders: #### 1. Board mandate (corporate law — Art. 716 OR) - A board member (Verwaltungsrat) relationship is a **corporate mandate**, not an employment contract - Board members are "entitled to reasonable remuneration" under Swiss case law, but **can waive this right** — there is no statutory minimum board fee - A board member serving without compensation is legal and common in startups - The board mandate creates no social security obligations if no compensation is paid - **This is the cleanest path for founders not taking salary:** serve as board members without board fees #### 2. Employment contract (Art. 319 CO) - If you also perform operational work (portfolio management, client service) as an employee, Swiss law treats this as an **employment contract** regardless of what you call it - The Federal Supreme Court (4A_366/2021) has confirmed: if the elements of an employment contract exist (provision of labor, subordination, duration, remuneration), it's an employment contract — even if the parties label it a "consulting agreement" or "delegation" - **Remuneration is an essential element of an employment contract** (Art. 319(1) CO), BUT the Federal Supreme Court has also held that "the determination of the salary amount is not necessary for the conclusion of an employment contract" — meaning the contract can specify that salary is CHF 0 or deferred - **Key risk:** If you have an employment contract with CHF 0 salary and the relationship later breaks down, a court could requalify the arrangement and award "customary salary" (Art. 362 CO). The Federal Supreme Court in 4A_366/2021 determined a customary salary of CHF 7,200/month for a portfolio manager when the contract was silent on amount - **Mitigation:** The contract should explicitly state that salary is CHF 0 / deferred until AUM reaches a specified threshold, and that the founders agree to this voluntarily as shareholders. This is stronger than silence #### 3. Mandate agreement (Art. 394 CO) — alternative to employment - Instead of an employment contract, founders can use a **mandate agreement** (Auftrag) for their operational work - A mandate does not require remuneration (Art. 394 CO) — can be gratuitous - No social security obligations if no compensation - **Risk:** If the work looks like employment (subordination, regular hours, integration into the company), a court or social security authority could reclassify it as employment. The Uber driver case (2023) reinforced that factual subordination + organizational integration = employment regardless of contract label - For founders who are also board members and shareholders, the subordination element is weaker (they control the company), which makes mandate characterization more defensible #### 4. Social security implications | Scenario | Social security obligations | |----------|---------------------------| | Board mandate, no fee | None — no compensation, no contributions | | Employment contract, CHF 0 salary | Technically an employment relationship exists, but with CHF 0 salary there are no contributions to calculate. However, the social security authority (Ausgleichskasse) may question a CHF 0 employment contract and could impute a "customary salary" for contribution purposes | | Mandate agreement, no fee | None — mandate is not employment. But if reclassified as employment, retroactive contributions for up to 5 years | | Deferred compensation via dividends | Shareholders receive dividends, not salary. No social security on dividends. Legal but means no AHV/pension contributions during the deferral period — founders should consider voluntary AHV contributions | #### 5. Practical recommendation for the no-salary startup **Recommended structure:** 1. **Both brothers serve on the board (Verwaltungsrat) without board fees** — clean, no social security, no employment law complications 2. **Operational work performed under a mandate agreement (Auftrag) with CHF 0 compensation** — explicitly stated as gratuitous, with a clause that compensation will commence when the firm reaches a defined AUM threshold 3. **The mandate agreement should reflect genuine founder autonomy:** no fixed working hours, no supervised reporting line, no integration as "employees" in the traditional sense — you are founders directing the company, not subordinated workers 4. **Have an employment lawyer draft this** — the line between mandate and employment is fact-specific, and getting it wrong creates retroactive social security liability for up to 5 years 5. **Consider voluntary AHV contributions** (Art. 1bis AHVG) — as non-employed founders, you can make voluntary contributions to maintain pension/insurance coverage. ~CHF 5,000–25,000/year depending on contribution class 6. **When AUM grows and the firm can afford salaries:** Convert the mandate to an employment contract at market rates. Clean transition — no legal obstacle **FINMA and SEC perspective on zero salary:** - **FINMA:** No requirement for minimum compensation. FINMA cares about whether the qualified managers are real and competent, not what they're paid. The SO may ask how the managers sustain themselves financially — a credible answer (personal savings, other income, shareholder dividends) is sufficient - **SEC:** No salary requirement. But the SEC examines whether the CCO has "sufficient resources." A CCO working for free at a firm with no revenue may raise questions about whether the compliance program is genuine. The answer: the compliance program exists, is documented, is reviewed annually, and the CCO has the authority to enforce it — compensation level is not the test. The external compliance firm provides the substantive compliance support #### 6. What the business plan should say FINMA requires a 3-year business plan with financial projections. If the founders take no salary: - **Personnel costs in the business plan should reflect CHF 0 for founders** during the deferral period, with a note explaining that founders are deferring compensation voluntarily as shareholders until AUM reaches a specified threshold - **Show the transition point:** e.g., "Founders will commence salary at CHF X/year when AUM reaches CHF 50M, projected in Year 2" - **Include voluntary AHV contributions** in the cost projections (~CHF 10,000–20,000/year for both founders) - **The own funds calculation (25% of fixed costs) benefits from low personnel costs** — if your fixed costs are CHF 100,000/year (rent, IT, insurance, SO fees, AHV, external compliance, part-time qualified manager), own funds requirement is CHF 25,000. With CHF 100,000 paid-in capital, you have a CHF 75,000 buffer. If founders were taking market salaries (CHF 300,000+), fixed costs would be CHF 400,000+ and own funds requirement would be CHF 100,000 — at the capital floor with no buffer ### 6J. Complete Role and Responsibility Matrix — Launch Structure **The launch team:** | Person | Role | FTE | Compensation | Regulatory functions | |--------|------|-----|--------------|---------------------| | **You** | Portfolio Manager + Qualified Manager #1 + CCO (SEC) + Board member | 1.0 | CHF 0 (deferred) | FINMA qualified manager, SEC associated person, SEC CCO, board member (Art. 716 OR) | | **Your brother** | Operations + Client Service + Business Development + Board member | 1.0 | CHF 0 (deferred) | Board member (Art. 716 OR). No regulatory functions — no compliance, no AML, no PM role | | **Part-time qualified manager** | Board member with management function (Qualified Manager #2) | 0.1–0.2 (4–8 hrs/week) | CHF 10,000–25,000/year (board fee) | FINMA qualified manager #2. Business continuity backup | | **External compliance firm** | AML officer + Compliance + Risk management + SO liaison | 0.1–0.2 (contracted scope) | CHF 10,000–25,000/year | FINMA compliance function, AML officer, risk management, ICS maintenance, SO liaison, audit preparation | **Who wears which hat — complete matrix:** | Responsibility | You | Brother | Part-time QM | External firm | |---------------|------|---------|--------------|--------------| | **Portfolio management (investment decisions)** | ✅ Performs | ❌ | ❌ | ❌ | | **Qualified manager #1 (FINMA)** | ✅ | ❌ | ❌ | ❌ | | **Qualified manager #2 (FINMA)** | ❌ | ❌ | ✅ | ❌ | | **CCO (SEC Rule 206(4)-7)** | ✅ Designates, signs off | ❌ | ❌ | ✅ Supports (drafts review, monitors, prepares annual review) | | **AML officer (FINMA/AMLA)** | ❌ | ❌ | ❌ | ✅ Serves as external AML officer | | **Compliance function (FINMA)** | ❌ | ❌ | ❌ | ✅ Serves as external compliance function | | **Risk management (FINMA)** | ❌ | ❌ | ❌ | ✅ Serves as external risk manager | | **SO liaison** | ❌ | ❌ | ❌ | ✅ Point of contact for SO | | **Board meetings / governance** | ✅ | ✅ | ✅ | ❌ (may attend to report) | | **Business continuity / deputy PM** | ❌ | ❌ | ✅ Can step in | ❌ | | **Client onboarding (KYC collection)** | ✅ Initiates | ✅ Administers | ❌ | ✅ Reviews and approves | | **Client relationships / RMs** | ✅ | ✅ | ❌ | ❌ | | **Business development / prospecting** | ✅ | ✅ | ❌ | ❌ | | **Operations / admin** | ❌ | ✅ | ❌ | ❌ | | **IT / PMS / reporting** | ❌ | ✅ | ❌ | ❌ | | **Custodian bank coordination** | ✅ | ✅ | ❌ | ❌ | | **Trade allocation monitoring** | ✅ Executes trades | ❌ | ❌ | ✅ Monitors for fairness | | **Form ADV maintenance (SEC)** | ✅ Signs off | ❌ | ❌ | ✅ Drafts and updates | | **Annual compliance review (SEC)** | ✅ Signs off as CCO | ❌ | ❌ | ✅ Prepares review | | **Regulatory reporting (FINMA)** | ❌ | ❌ | ❌ | ✅ Prepares and files | | **Regulatory change monitoring** | ❌ | ❌ | ❌ | ✅ Tracks and updates policies | | **Investment process documentation** | ✅ | ❌ | ✅ Reviews | ❌ | | **Risk tolerance / guidelines** | ✅ Drafts | ❌ | ✅ Reviews | ✅ Maintains ICS documentation | **Key design principles:** 1. **You are the only PM.** All investment decisions are yours. No one else makes portfolio decisions. 2. **The external firm provides independent compliance oversight.** They can push back on you, flag issues to the board, and report to the SO without family dynamics compromising their judgment. This independence is valuable to FINMA, the SO, and the SEC. 3. **Your brother's role is operations and business development.** He has no regulatory function that requires financial expertise. His value is in client service, administration, and growing the firm — the COO track. 4. **The part-time qualified manager satisfies FINMA's 2-manager rule** without the risk of the single-manager exception. They provide genuine management oversight and business continuity. 5. **You as CCO is supported by the external firm.** You hold the regulatory designation; they do the substantive work. This is common at small dual-registered firms and is defensible to the SEC if the compliance program is genuine, documented, and the CCO has authority. ### 6K. Staged Growth Model — Role Evolution Over Time The compliance structure should evolve as the firm grows. The external firm is not a temporary stopgap — it's the permanent foundation, with internal capacity added on top as scale justifies. **Stage 1: Launch (CHF 0–20M AUM, 0–15 clients)** | Person | Role | What they actually do | |--------|------|----------------------| | You | PM + QM #1 + CCO + Board | Manage portfolios, make investment decisions, sign compliance reports, board governance | | Brother | Ops + Client Service + Board | Client onboarding paperwork, custodian coordination, reporting, admin, prospecting | | Part-time QM | Board + QM #2 | Monthly board meeting, quarterly investment/compliance review, business continuity | | External firm | Compliance/AML/Risk/SO | Everything compliance — KYC review, transaction monitoring, AML officer, ICS, SO liaison, audit prep | External firm cost: CHF 10,000–25,000/year. At this scale, compliance workload is light — few clients, few transactions, simple structure. **Stage 2: Growth (CHF 20–80M AUM, 15–30 clients)** | Person | Role | What changes | |--------|------|-------------| | You | PM + QM #1 + CCO + Board | Same. More clients = more trades to allocate, more KYC files. CCO annual review more substantial | | Brother | Ops + Client Service + Board + **Compliance admin support** | Starts handling KYC data collection, onboarding paperwork, compliance file maintenance under external firm's supervision. Learning by doing. **No formal compliance role — executes admin, external firm reviews** | | Part-time QM | Board + QM #2 | Same commitment. May increase to 20–25% as complexity grows | | External firm | Compliance/AML/Risk/SO | Still does all substantive compliance. Scope increases (more clients, more monitoring) — cost may rise to CHF 15,000–30,000/year. Brother's admin support reduces their workload, keeping cost manageable | **Brother's optional training at this stage:** If you want him to build compliance knowledge for future roles, he can begin the CAS Compliance in Financial Services (University of Geneva/St. Gallen, ~CHF 12,000–15,000, 6–12 months). But this is a career development choice, not a regulatory requirement. His primary track remains operations/COO. **Stage 3: Scale (CHF 80–150M AUM, 30–50 clients)** | Person | Role | What changes | |--------|------|-------------| | You | PM + QM #1 + CCO + Board | Same. Consider whether CCO role should move to a dedicated hire | | Brother | **COO** + Board | Full-time operations executive. Client onboarding, vendor management, IT, HR, reporting. No compliance role | | **New hire: Professional compliance officer** | Compliance + Deputy CCO | CHF 80,000–120,000/year. Handles day-to-day compliance, AML administration, trade allocation monitoring, Form ADV updates. Professional, independent of family dynamics | | Part-time QM | Board + QM #2 | May transition to non-executive board member or increase commitment | | External firm | **Reduced scope: second-line review + SO liaison + audit prep** | CHF 8,000–15,000/year. Quarterly review of internal compliance person's work. Independent oversight retained | **At this stage, the structure mirrors your current firm:** internal compliance person + external firm for specialized support and independent review. **Stage 4: Mature (CHF 150M+ AUM, 50+ clients)** | Person | Role | What changes | |--------|------|-------------| | You | PM + Board (may step back from CCO) | CCO transitions to dedicated compliance professional | | Brother | COO + Board | Full executive role | | Internal compliance team | 1–2 people | CHF 120,000–200,000/year total. Day-to-day compliance, AML, risk | | External firm | **Advisory / periodic independent review** | CHF 5,000–10,000/year. Annual independent review, regulatory updates, ad hoc advisory | **Why keep the external firm even at Stage 4:** Independent oversight. Your current firm has both an internal compliance team AND SwissComply — the external firm provides the independent second-line review that regulators value. The same model applies at any scale. ### 6L. Why Not Move Compliance to Your Brother? **The control/flexibility argument for in-house compliance is real** — faster turnaround on KYC, customized client processes, direct visibility into compliance work. These advantages become material when client volume creates enough flow that the external firm's turnaround time becomes friction (~15–20 active clients with regular onboarding). **But the case for keeping compliance with the external firm and moving your brother toward COO is stronger:** 1. **Independence:** The external firm can push back on you without family dynamics. FINMA, the SO, and the SEC all value independence in the compliance function. A brother who is co-owner, board member, and compliance officer has inherent conflicts that regulators scrutinize. 2. **Competence gap:** The external firm has lawyers and specialists with 10–20 years experience. Your brother would need 2–3 years of training plus CAS certification to reach baseline competence. Even then, the gap never fully closes for a straightforward long-only shop where compliance is simple but getting it wrong is expensive. 3. **Cost is immaterial at scale:** At CHF 50M AUM and 1% fee, the external firm costs ~3% of revenue. At CHF 200M, ~1.5–2%. Saving this by moving to an in-house brother-compliance-officer is a poor trade against the risk and independence loss. 4. **FINMA independence threshold:** At >5 FTE or >CHF 2M gross income, compliance must be independent of revenue. If your brother is compliance officer at that point, you'd need a separate independent person anyway — defeating the transition. 5. **SEC CCO conflict:** A brother-CCO at a firm where his brother is PM and co-owner is a textbook conflict that an SEC examiner would flag. The external firm supporting you as CCO is a much safer structure. 6. **Brother's optimal value:** As the firm grows, the COO/operations role becomes complex enough to be a full-time executive job — client onboarding, custodian relationships, reporting, IT, HR, vendor management, office. His institutional knowledge and ownership stake are more valuable there than in compliance. **The crossover where in-house compliance makes sense:** ~CHF 80–150M AUM, when client volume justifies a dedicated professional compliance hire. But that hire should be a professional, not your brother. The external firm transitions to second-line review. This mirrors your current firm's structure (internal team + SwissComply). **Your brother's career path is COO, not compliance.** If he develops an interest in compliance through years of shadowing, he could become a member of a compliance team at Stage 3 or 4 — but as one member with independent oversight, not as a solo replacement for the external firm. ### 6M. Growth Triggers (When Structure Must Change) | Trigger | What changes | Action needed | |---------|-------------|---------------| | >5 FTE or >CHF 2M gross income | Risk management must be independent of revenue | External firm already provides independence — no change needed. If considering in-house compliance, must ensure independence | | >10 FTE or >CHF 5M gross income | Independent governance body (board) required | Appoint board with majority non-management members. Part-time QM may transition to non-executive role | | Founders commence salary | Own funds requirement jumps (25% of fixed costs increases) | Ensure capital buffer above CHF 100,000 floor covers the higher own funds | | Launch pooled vehicles (funds/AMCs) | May need "manager of collective assets" authorization | Upgrade license, CHF 200,000 capital, heavier organization | | US AUM growth | More SEC examination scrutiny | Consider dedicated US-side compliance support | | ~CHF 80–150M AUM | Compliance volume justifies in-house hire | Hire professional compliance officer (Stage 3). External firm transitions to reduced scope | | Part-time QM becomes unavailable | Need replacement qualified manager | Identify backup. Maintain relationship with 1–2 candidates | ### 6N. External Support (Not Employees but Required) | Function | Provider type | Cost (annual) | |-----------|--------------|---------------| | **External compliance outsourcing** (AML officer, compliance, risk, ICS, SO liaison, audit prep) | SwissComply / Goldblum / BDO / Grant Thornton | CHF 10,000–25,000/year | | **Part-time qualified manager** (board member, QM #2, business continuity) | Retired PM / consultant / professional board member | CHF 10,000–25,000/year | | SO supervision + audit | FINMA-authorised SO + licensed audit firm | CHF 6,000–15,000/year | | Statutory audit (CO Art. 727a) | Licensed auditor | CHF 5,000–15,000/year (may be waivable if ≤10 FTE) | | Legal counsel (ongoing) | Swiss law firm | CHF 5,000–20,000/year (as needed) | | US legal counsel (ongoing) | US securities law firm | $5,000–20,000/year (as needed) | | Tax advisory | Swiss tax advisor | CHF 3,000–10,000/year | | IT / portfolio management system | Software vendor | CHF 10,000–30,000/year | | Custodian bank connectivity | Swiss custodian bank | Typically no direct fee (revenue share on transactions) | | Professional indemnity insurance | ISA-supervised insurer | CHF 3,000–8,000/year | --- ## 7. Timeline ### Phase 0: Non-Compete Period (Months -6 to 0) *During employment resignation notice + 6-month non-compete. Can prepare but cannot contact clients or relationship managers.* | Month | Activity | Can do during non-compete? | |-------|----------|---------------------------| | -6 | Engage Swiss regulatory lawyer. Engage US securities lawyer. Initial consultations. | ✅ Yes — professional advisors, not clients | | -6 to -5 | Confirm Option B structure with lawyers. Incorporate Swiss AG. | ✅ Yes | | -5 | Incorporate Swiss AG. Notarize articles of association. Register in commercial register. Pay in CHF 100,000 capital. | ✅ Yes — incorporating a company is not competing | | -5 to -4 | Select and engage SO. Initial SO contact, understand their requirements. | ✅ Yes | | -4 to -3 | Draft governance documents (AI + lawyer review): business plan, risk framework, integrated compliance manual (FINMA + SEC), AML framework, internal controls, investment process docs, trade allocation policy. | ✅ Yes | | -3 to -2 | Draft Form ADV Part 1A, 2A, 3 (AI + US lawyer review). Set up IARD account. | ✅ Yes — filing with SEC is not client contact | | -2 | Finalize FINMA application dossier. Submit to SO for pre-review. | ✅ Yes | | -1 | Respond to SO feedback. Finalize all documents. Prepare office space, IT systems. | ✅ Yes | | 0 | **Non-compete expires.** Submit FINMA application to SO → FINMA. File Form ADV with SEC via IARD. | ✅ Yes — this is the filing moment | **Critical non-compete boundary:** During Phase 0, you can do everything EXCEPT: - ❌ Contact existing or prospective clients - ❌ Contact relationship managers at custodian banks or distribution partners - ❌ Solicit employees from current employer - ❌ Represent yourself as open for business / accept mandates You CAN: - ✅ Engage lawyers, accountants, consultants - ✅ Incorporate companies - ✅ Prepare and file regulatory applications - ✅ Lease office space - ✅ Set up IT systems - ✅ Negotiate with SOs - ✅ Hire employees who are not from your current employer ### Phase 1: Regulatory Review (Months 0–8) | Month | FINMA track | SEC track | Parallel activities | |-------|-------------|-----------|---------------------| | 0 | Submit application via SO → FINMA | File Form ADV via IARD | Begin client outreach (non-compete expired) | | 1–2 | SO review and confirmation | SEC initial review (45-day clock) | Hire operations person. Set up custodian bank relationships (now permitted) | | 2–3 | FINMA review begins | SEC registration granted or questions | Finalize IT/PMS. Draft client agreements | | 3–6 | FINMA Q&A / follow-ups | Post-registration: compliance program live | Begin marketing/preliminary client discussions | | 4–8 | FINMA license decision | — | Onboard first clients (if SEC-registered and FINMA allows conditional operation — generally NO, must wait for FINMA license) | **Note:** Under Option B, you cannot commence regulated activity until the FINMA license is granted. SEC registration may come faster (45 days), but since it's the same entity, the FINMA license is the gating item. You cannot serve US clients from the Swiss entity until FINMA authorizes the entity to operate. This is a key timing constraint — the SEC registration being active doesn't help if the FINMA license hasn't been granted yet, because the entity isn't authorized to conduct portfolio management from Switzerland. ### Phase 2: Launch (Month 8+) | Activity | Timing | |----------|--------| | FINMA license granted | Month 4–8 (best case 4, typical 6, worst case 12) | | SEC registration active | Month 1–2 (if clean filing) | | First client onboarded | Month 8–9 (after FINMA license) | | First SO audit | Month 12–18 (risk-based, may extend to 48 months for low-risk) | | AUM buildup | Months 8–24+ | ### Total Timeline Summary | Milestone | From today | From end of non-compete | |-----------|-----------|------------------------| | Non-compete expires | Month 6 | — | | SEC registration active | Month 7–8 | Month 1–2 | | FINMA license granted | Month 10–14 | Month 4–8 | | First client onboarded | Month 10–15 | Month 4–9 | | Break-even (depends on AUM) | Month 18–30+ | Month 12–24+ | --- ## 8. Cost Estimate ### 8A. One-Time Setup Costs (Option B — Default) | Category | Low estimate | High estimate | Notes | |----------|-------------|--------------|-------| | Swiss company formation (AG) | CHF 2,500 | CHF 5,000 | Notary, commercial register, formation | | Minimum paid-in capital | CHF 100,000 | CHF 100,000 | Locked in the company (not a cost, but capital committed) | | Swiss legal advisory (FINMA application) | CHF 15,000 | CHF 30,000 | Depends on complexity and lawyer rates | | US legal advisory (SEC registration) | $15,000 | $40,000 | US securities lawyer, Form ADV, compliance program | | SO onboarding fee | CHF 1,000 | CHF 3,000 | One-time affiliation fee | | FINMA application fee | CHF 5,000 | CHF 5,000 | Fixed | | IARD initial registration fee | $225 | $225 | Fixed | | AI-drafted documents (your time + tools) | CHF 2,000 | CHF 5,000 | AI tool subscriptions + your time | | Lawyer review of AI-drafted docs | CHF 10,000 | CHF 25,000 | Reviewing and finalizing AI drafts | | Delegation agreement | — | — | Not needed under Option B (single entity). CHF 5,000–15,000 if Options A/C adopted | | Shareholders' agreement | CHF 5,000 | CHF 15,000 | Among owners | | Employment contracts / mandate agreements | CHF 3,000 | CHF 8,000 | Including mandate agreements for founders (CHF 0 salary) and part-time QM board mandate | | IT / PMS setup (one-time) | CHF 5,000 | CHF 15,000 | System configuration, data migration | | Office setup (deposit, fit-out) | CHF 5,000 | CHF 15,000 | Security deposit, furniture | | **Total one-time (excl. capital)** | **~CHF 75,000** | **~CHF 165,000** | | | **Plus locked-in capital** | CHF 100,000 | CHF 100,000 | Minimum, maintained at all times | | **Total cash needed at start** | **~CHF 175,000** | **~CHF 265,000** | | *If using two entities (Option A or C), see Section 8D for detailed comparison.* ### 8D. Cost and Timeline Comparison: Option A vs. B vs. C #### One-Time Setup Costs | Cost Category | Option B (Single Entity) | Option A (Two Swiss Entities) | Option C (Swiss + US LLC) | |---------------|--------------------------|-------------------------------|---------------------------| | Company formation | CHF 2,500–5,000 (1 AG) | CHF 5,000–10,000 (2 AGs) | CHF 2,500–5,000 (AG) + $500–2,000 (LLC) | | Minimum paid-in capital | CHF 100,000 | CHF 100,000–200,000 (1 or 2 entities need capital; if Entity 2 is FINMA-licensed: 2× CHF 100K. If Entity 2 is pure advisory/delegating: CHF 100K for Entity 1 only) | CHF 100,000 (Swiss AG only; US LLC no statutory minimum) | | Swiss legal advisory | CHF 15,000–30,000 | CHF 25,000–50,000 (2 applications + delegation agreement) | CHF 15,000–30,000 (1 application + delegation agreement) | | US legal advisory | $15,000–40,000 | $20,000–50,000 (Form ADV + participating affiliate) | $20,000–55,000 (Form ADV + participating affiliate + US entity setup + tax structuring) | | SO onboarding fee | CHF 1,000–3,000 | CHF 2,000–6,000 (2 SOs) or CHF 1,000–3,000 (group supervision) | CHF 1,000–3,000 (1 SO) | | FINMA application fee | CHF 5,000 | CHF 5,000–10,000 (1 or 2 applications) | CHF 5,000 | | IARD initial registration | $225 | $225 | $225 | | Delegation/participating affiliate agreement | — | CHF 5,000–15,000 | CHF 5,000–15,000 + $3,000–10,000 (US legal) | | Shareholders' agreement | CHF 5,000–15,000 | CHF 8,000–20,000 (more complex, 2 entities) | CHF 8,000–20,000 (cross-border) | | Employment contracts | CHF 3,000–8,000 | CHF 3,000–8,000 | CHF 3,000–8,000 + $2,000–5,000 (US employment if US staff) | | Tax structuring | CHF 3,000–10,000 | CHF 5,000–15,000 (transfer pricing between 2 Swiss entities) | CHF 10,000–25,000 + $5,000–15,000 (cross-border tax, ECI, treaty analysis) | | AI-drafted documents | CHF 2,000–5,000 | CHF 2,000–5,000 | CHF 2,000–5,000 | | Lawyer review of AI drafts | CHF 10,000–25,000 | CHF 15,000–35,000 (2x compliance frameworks) | CHF 15,000–35,000 (2x compliance frameworks + US-specific) | | IT / PMS setup | CHF 5,000–15,000 | CHF 7,000–20,000 (2 entities, separate books) | CHF 7,000–20,000 (2 entities, separate books) | | Office setup | CHF 5,000–15,000 | CHF 5,000–15,000 | CHF 5,000–15,000 + $2,000–5,000 (US office if needed) | | US registered agent | — | — | $100–500/year | | **Total one-time (excl. capital)** | **~CHF 85,000–185,000** | **~CHF 125,000–265,000** | **~CHF 125,000–280,000 + $15,000–40,000** | | **Locked-in capital** | CHF 100,000 | CHF 100,000–200,000 | CHF 100,000 | | **Total cash at start** | **~CHF 185,000–285,000** | **~CHF 225,000–465,000** | **~CHF 225,000–380,000 + $15,000–40,000** | #### Annual Operating Costs | Cost Category | Option B | Option A | Option C | |---------------|----------|----------|----------| | Personnel (2 PMs + 1 ops) | CHF 300,000–600,000 | CHF 300,000–600,000 (shared) | CHF 300,000–600,000 + $50,000–100,000 (US staff if needed) | | External compliance | CHF 15,000–40,000 (1 framework, dual-regime) | CHF 20,000–55,000 (2 frameworks, simpler each) | CHF 20,000–55,000 (2 frameworks) | | SO supervision | CHF 3,000–15,000 | CHF 6,000–30,000 (2 SOs) or CHF 3,000–15,000 (group) | CHF 3,000–15,000 | | Statutory + regulatory audit | CHF 5,000–15,000 | CHF 10,000–30,000 (2 audits) | CHF 5,000–15,000 + $5,000–15,000 (US audit if applicable) | | Professional indemnity insurance | CHF 3,000–8,000 | CHF 5,000–15,000 (2 entities) | CHF 3,000–8,000 + $3,000–10,000 (US E&O) | | Office rent | CHF 12,000–36,000 | CHF 12,000–36,000 | CHF 12,000–36,000 + $6,000–18,000 (US office) | | IT / PMS / data | CHF 10,000–30,000 | CHF 12,000–35,000 (2 books) | CHF 12,000–35,000 | | Swiss legal (ongoing) | CHF 5,000–20,000 | CHF 8,000–25,000 | CHF 5,000–20,000 | | US legal (ongoing) | $5,000–15,000 | $5,000–15,000 | $8,000–25,000 | | Tax advisory | CHF 3,000–10,000 | CHF 5,000–15,000 | CHF 10,000–25,000 + $5,000–15,000 | | IARD + state filings | $225 + $500–2,000 | $225 + $500–2,000 | $225 + $500–2,000 | | US registered agent | — | — | $100–500 | | **Total annual operating** | **~CHF 370,000–800,000** | **~CHF 400,000–900,000** | **~CHF 400,000–900,000 + $30,000–100,000** | #### Timeline Comparison | Milestone | Option B | Option A | Option C | |-----------|----------|----------|----------| | **Preparation (during non-compete)** | 6 months | 6 months | 6 months | | **FINMA application submission** (end of non-compete) | Month 6 | Month 6 (Entity 1); Entity 2 may file simultaneously or after | Month 6 (Swiss AG) | | **SEC Form ADV filing** | Month 6–7 (same entity) | Month 6–7 (Entity 2) | Month 6–7 (US LLC) | | **SEC registration active** | Month 7–8 (45-day clock from filing) | Month 7–8 | Month 7–8 | | **FINMA license granted** | Month 10–14 (4–8 months from complete file) | Month 10–14 (Entity 1); Entity 2 adds 2–4 months if also seeking FINMA license | Month 10–14 | | **Participating affiliate arrangement finalized** | — | Month 8–12 (after SEC registration, before US client onboarding) | Month 8–12 | | **First client onboarded** | Month 10–15 (after FINMA license) | Month 10–15 (Entity 1); Entity 2 US clients: Month 12–16 (after both licenses + delegation agreement) | Month 12–16 (after FINMA license + delegation + participating affiliate) | | **Full operational (both US + Swiss clients)** | Month 10–15 | Month 12–18 | Month 12–18 | #### Summary: The Trade-Offs | Dimension | Option B wins | Option A wins | Option C wins | |-----------|--------------|--------------|--------------| | **Lowest cost** | ✅ CHF 185K–285K start | — | — | | **Fastest to launch** | ✅ 10–15 months | — | — | | **Simplest compliance** | ✅ One framework (but dual-regime) | — | — | | **Regulatory firewall** | — | ✅ | ✅ | | **Cleanest trade allocation** | — | ✅ Separate books | ✅ Separate books | | **No dependency on FINMA-SEC agreement** | — | — (still needs it if Entity 2 is Swiss) | ✅ US entity not dependent | | **US client preference (US-domiciled adviser)** | — | — | ✅ | | **No participating affiliate complexity** | ✅ | — | — | | **Leverages your existing experience** | — | ✅ If your firm is Option A | ✅ If your firm is Option C | **Cost delta between cheapest (B) and most expensive (C):** ~CHF 40,000–95,000 more in one-time costs + ~CHF 30,000–100,000 + $30,000–100,000 more in annual operating costs. **Timeline delta:** Option B can be fully operational 2–3 months faster than A or C, because the participating affiliate arrangement and delegation agreements add time. **The fundamental question:** Is the regulatory isolation and trade allocation simplicity worth CHF 40K–100K+ in additional one-time costs, CHF 30K–100K+ in additional annual costs, and 2–3 months of additional time? For a startup watching every franc, Option B is compelling. For a firm prioritizing risk isolation and operational cleanliness (especially with the trade allocation concern), Options A or C justify the premium. ### 8B. Annual Operating Costs (Option B — Year 1, No-Salary Founders) | Category | Low estimate | High estimate | Notes | |----------|-------------|--------------|-------| | Founders' compensation (both) | CHF 0 | CHF 0 | Deferred until AUM threshold. Board mandate + mandate agreement structure | | External compliance outsourcing | CHF 10,000 | CHF 25,000 | AML officer, compliance, risk, ICS, SO liaison, audit prep | | Part-time qualified manager | CHF 10,000 | CHF 25,000 | Board mandate, ~10–20% FTE, QM #2 | | Voluntary AHV (both founders) | CHF 10,000 | CHF 20,000 | Avoid pension coverage gaps | | SO annual supervision fee | CHF 3,000 | CHF 15,000 | Risk-based, varies by SO | | Statutory + regulatory audit | CHF 5,000 | CHF 15,000 | Annual or risk-based cycle | | Professional indemnity insurance | CHF 3,000 | CHF 8,000 | Annual premium | | Office rent | CHF 12,000 | CHF 36,000 | Depends on location (Zurich/Geneva vs. smaller canton) | | IT / PMS / data feeds | CHF 10,000 | CHF 30,000 | Portfolio management system, market data, reporting | | Swiss legal (ongoing, as needed) | CHF 5,000 | CHF 20,000 | Ad hoc advice, contract review | | US legal (ongoing, as needed) | $5,000 | $15,000 | Form ADV amendments, ad hoc | | Tax advisory | CHF 3,000 | CHF 10,000 | Annual tax filing. No transfer pricing needed under Option B (single entity) | | IARD annual filing fee | $225 | $225 | Fixed | | State notice filing fees (US) | $500 | $2,000 | Varies by number of states | | Insurance, admin, misc. | CHF 5,000 | CHF 15,000 | D&O, general liability, office supplies | | **Total annual operating** | **~CHF 76,000** | **~CHF 200,000** | | ### 8C. Cost Summary and Break-Even Analysis (Option B) #### Revenue Model The firm's revenue depends on the fee structure and how much AUM is sourced through relationship managers (RMs) vs. direct client relationships: - **Gross management fee:** 0.8% average (blended across equity, fixed income, commodities) - **RM revenue share:** RMs take 60% of the gross fee for assets they introduce/service - **Net fee to firm:** 0.32% of AUM when 100% sourced via RMs (0.8% × 40%) As the firm builds direct client relationships, the blended RM share decreases and the net fee to the firm increases: | RM share of AUM | Net fee to firm | Per CHF 10M AUM | |-----------------|----------------|-----------------| | 100% via RMs | 0.32% | CHF 32,000/year | | 80% via RMs, 20% direct | 0.42% | CHF 42,000/year | | 50% via RMs, 50% direct | 0.56% | CHF 56,000/year | | 0% via RMs (all direct) | 0.80% | CHF 80,000/year | **At launch, the vast majority of AUM will be sourced via RMs** — the firm has no existing direct client base. The break-even calculations below assume 100% via RMs (worst case) and show how break-even improves as direct relationships build. #### Operating Costs | Scenario | Annual opex (low) | Annual opex (high) | Notes | |----------|-------------------|-------------------|-------| | **No founder salaries** | CHF 76,000 | CHF 200,000 | Founders on CHF 0 mandate + voluntary AHV + external compliance + part-time QM | | **CHF 100k salary each** | CHF 296,000 | CHF 420,000 | Add CHF 200k salaries + ~CHF 30–40k employer social security (AHV/IV/EO/ALV/BVG) − remove voluntary AHV | **Social security on salaries:** When founders convert from mandate (CHF 0) to employment contracts at CHF 100k each, employer social security contributions add approximately CHF 30,000–40,000/year (AHV/IV/EO ~10.25%, ALV ~2.2%, BVG ~5–7%, on CHF 200,000 total salary, subject to caps). The voluntary AHV contributions (CHF 10,000–20,000) are removed as they're replaced by mandatory employer contributions. #### Break-Even AUM | Scenario | 100% via RMs (0.32%) | 80% RMs / 20% direct (0.42%) | 50/50 (0.56%) | 100% direct (0.80%) | |----------|----------------------|------------------------------|---------------|---------------------| | **No salaries** | CHF 24–62M | CHF 18–48M | CHF 14–36M | CHF 10–25M | | **CHF 100k salary each** | CHF 92–131M | CHF 71–101M | CHF 53–75M | CHF 37–52M | **Key observations:** 1. **The RM revenue share dramatically increases break-even AUM.** At 0.32% net fee with 100% via RMs, break-even without salaries is CHF 24–62M. With salaries, it jumps to CHF 92–131M. The firm keeps only 40% of fee revenue on RM-sourced assets — this is the single most important economic variable in the business model. 2. **Salaries at CHF 100k each add ~CHF 68–69M to break-even AUM** when all assets are via RMs (0.32% net). This is the cost of CHF 200k salaries + social security, divided by the thin net fee. 3. **Direct client relationships are the path to profitability.** As the firm transitions from RM-sourced to direct-sourced AUM, the net fee improves and break-even drops sharply. A 50/50 mix reduces break-even by ~40% compared to 100% via RMs. 4. **The realistic launch trajectory:** Year 1 will be almost entirely RM-sourced. Break-even without salaries at 0.32% net fee requires CHF 24–62M AUM. This is achievable but not trivial — it requires significant AUM from day one, which depends on the RMs you can attract post-non-compete. With salaries, CHF 92–131M AUM is needed before the firm covers its costs including founder compensation — this is a very high bar for a startup. #### Own Funds Implication | Scenario | Own funds (25% of fixed costs) | vs CHF 100,000 capital floor | |----------|-------------------------------|------------------------------| | No salaries | CHF 19,000–50,000 | ✅ Buffer: CHF 50,000–81,000 | | CHF 100k salary each | CHF 74,000–105,000 | ⚠️ At high end, exceeds capital floor | **When founders commence salaries at CHF 100k each, the own funds requirement may exceed the CHF 100,000 capital floor** (at the high end: CHF 105,000 own funds vs CHF 100,000 capital). Options to address this: - **Inject additional capital:** CHF 5,000–25,000 above the CHF 100,000 floor to cover the shortfall - **Increase professional indemnity insurance:** Insurance can cover up to 50% of the own funds requirement (Art. 22(2) FinIA, Art. 31 FinIO). Increasing coverage by CHF 10,000–50,000 would offset the shortfall - **Time the salary commencement:** Start salaries when AUM is high enough that the firm can absorb the additional capital injection without strain #### Cash Needed Summary | Item | No salaries | With CHF 100k salaries each | |------|------------|---------------------------| | One-time setup (excl. capital) | CHF 75,000–165,000 | CHF 75,000–165,000 | | Locked-in minimum capital | CHF 100,000 | CHF 100,000 (may need CHF 5,000–25,000 more for own funds) | | Year 1 operating | CHF 76,000–200,000 | CHF 296,000–420,000 | | **Total cash for Year 1** | **CHF 251,000–465,000** | **CHF 471,000–610,000** | | **Break-even AUM (100% via RMs)** | **CHF 24–62M** | **CHF 92–131M** | | **Break-even AUM (50/50 RM/direct)** | **CHF 14–36M** | **CHF 53–75M** | *The RM revenue share is the dominant economic factor. The firm should prioritize building direct client relationships as fast as possible post-launch to reduce the blended RM share and improve the net fee to the firm.* --- ## 9. Non-Compete Analysis ### Swiss Non-Compete Law (Art. 340–340c CO) Your 6-month non-compete is governed by Art. 340 CO: | Requirement | Your situation | |-------------|----------------| | **Written form** | Must be in your employment contract (not just staff regulations) | | **Reasonableness** | Must be reasonable in time, place, and scope. 6 months is generally reasonable (max 3 years under Art. 340a) | | **Legitimate interest** | Employer must have legitimate interest (clientele protection, trade secrets). For asset managers, this is case-by-case — Zurich employment court (2007) found a client-poaching non-compete inadmissible where client relationship was based on PM's personal abilities | | **Compensation** | Not mandatory under Swiss law, but if agreed, it's owed regardless of alternative income (Federal Supreme Court, June 2025). If no compensation agreed, non-compete may be harder to enforce but is not automatically void | | **Lapse conditions** | Lapses if employer terminates without cause, or if employee terminates for cause attributable to employer | ### What You Can and Cannot Do During Non-Compete **CAN do (preparation work):** - ✅ Engage lawyers, accountants, consultants - ✅ Incorporate company(ies) - ✅ Lease office space - ✅ File regulatory applications (FINMA, SEC) - ✅ Draft internal documents (policies, manuals, business plan) - ✅ Set up IT systems - ✅ Engage supervisory organisation - ✅ Hire employees NOT from your current employer - ✅ Negotiate with service providers (custodian banks for connectivity — but NOT relationship managers for client introductions) **CANNOT do:** - ❌ Contact clients of current employer - ❌ Solicit relationship managers or distribution partners for client introductions - ❌ Accept investment mandates - ❌ Market or advertise the new firm to prospective clients - ❌ Poach employees from current employer - ❌ Use or disclose trade secrets / confidential information from current employer **Risk mitigation during non-compete:** 1. Have your employment contract reviewed by an employment lawyer to confirm the non-compete's scope and enforceability 2. Document everything you do during the non-compete — show it was preparation, not competition 3. Do not use any materials, models, or documents from your current employer 4. Wait until non-compete expires before any client outreach 5. Consider whether the non-compete might be reducible — Swiss courts "blue-pencil" overbroad clauses, and for asset managers, 6 months may be reduced if the employer's legitimate interest expires sooner (case law suggests 6 months is often sufficient for client protection, so it may be upheld) --- ## 10. Key Risks & Decision Points ### Decision Points (to resolve with lawyers before starting) 1. **Confirm Option B with lawyers** (Section 3) — Option B is the default choice. The decision to be confirmed with legal counsel is whether any factor (trade allocation, client preference, regulatory firewall) justifies the additional cost and complexity of Options A or C. **Recommend:** Get a Swiss regulatory lawyer + US securities lawyer to jointly confirm Option B is appropriate, or flag reasons to reconsider. 2. **When to resign?** If you resign and the 6-month non-compete starts, you need to time it so the non-compete expires when your applications are ready to file (or shortly after). Alternatively, start preparation while still employed (if your contract allows — check for side-activity restrictions). 3. **Which SO to choose?** The 4 SOs have different cultures, IT systems, and fee structures. AOOS (Zurich) and OSFINcontrol (Zug) are commonly chosen by asset managers in German-speaking Switzerland. Meet 2–3 before deciding. 4. **Qualified client threshold for US:** Under Rule 205-3, a qualified client needs $1M+ AUM with the adviser (or net worth $2.1M+ as of 2023 inflation-adjusted figures). Confirm current threshold with US counsel. 5. **120-day rule for SEC:** If you don't have $100M RAUM at filing, you can use Rule 203A-2(c) to register if you reasonably expect $100M within 120 days. This requires a credible pipeline — which you can't build during non-compete. Consider whether you'll have enough committed AUM at launch. ### Key Risks | Risk | Likelihood | Impact | Mitigation | |------|-----------|--------|------------| | FINMA application rejected or delayed | Medium | High (blocks launch) | Invest in application quality; use experienced lawyer; engage SO early for pre-review | | SEC processing delays for Swiss advisers | Low-Medium (moratorium just lifted) | Medium (delays US launch) | File clean Form ADV; leverage FINMA-SEC cooperation agreement | | Non-compete dispute with current employer | Low (if you follow the rules) | High (legal costs, injunction) | Strict adherence to permitted activities; employment lawyer review of contract | | Insufficient AUM at launch for SEC threshold | Medium | High (can't register) | Use 120-day rule; or start with ERA status and upgrade; or structure US entity differently | | Key person dependency (you) | High | High | Have PM #2 in place before launch; document all processes | | Compliance failure (dual regime, single entity) | Medium | High (enforcement, license risk for both regimes) | Invest in integrated compliance program; the trade allocation policy is the highest-risk document — get heavy lawyer review. Consider dedicated compliance hire early. The single-entity structure means a compliance failure affects both licenses simultaneously | | FINMA-SEC agreement reversal | Low | High (would force restructuring to Option A/C) | Monitor regulatory developments; the agreement is based on press releases, not a treaty. UK precedent (2020, still in effect) suggests durability. If reversed, would need to establish separate US entity | | Cost overrun | Medium | Medium | Budget at high end; phase hiring; use AI for document drafting | | SO revokes affiliation | Very low | Critical (no FINMA license) | Maintain good relationship; meet all SO requirements; don't cut corners | | Own funds shortfall (25% of fixed costs) | Medium | Medium (license condition breach) | Model own funds requirement carefully; keep capital buffer above CHF 100,000 floor | --- ## 11. Feasibility Assessment ### Verdict: FEASIBLE with caveats | Dimension | Assessment | Confidence | |-----------|-----------|------------| | **Regulatory pathway** | Clear and available. FINMA portfolio manager license is the most common Swiss financial license (~1,432 granted as of 2025). SEC RIA registration for Swiss entities resumed June 2025. | High | | **Timeline** | 12–18 months from today to launch, with 6 months usable for preparation during non-compete. Aggressive but achievable. | Medium-High | | **Cost** | CHF 175,000–265,000 to launch (incl. capital). CHF 76,000–200,000/year operating (no salaries) or CHF 296,000–420,000/year (CHF 100k each). Break-even at CHF 24–131M AUM depending on RM share and salary structure. RM revenue share (60%) is the dominant economic factor. | Medium | | **Headcount** | 2 founders (1 PM + 1 ops) + part-time qualified manager + external compliance firm. Brother has no financial experience — handles operations/COO track. | High | | **Your experience** | Major advantage — you know the operational realities, the systems, the custodian relationships, the compliance routines. This compresses timeline and reduces errors. | High | | **Non-compete** | 6 months is usable for preparation. The restriction on client contact is the main constraint, but regulatory filings and setup don't require client contact. | High | | **AI document drafting** | Can save CHF 30,000–55,000 on legal costs. Feasible for ~15 document categories. Requires careful lawyer review. | High | | **Market timing** | SEC moratorium just lifted — first-mover advantage for Swiss-based advisers wanting US access. FINMA process is well-established. | Medium-High | ### Key Caveats 1. **The $100M SEC AUM threshold is the single biggest feasibility question.** Without $100M RAUM, you can't register with the SEC (except via the 120-day rule, which requires a credible pipeline). You can't build that pipeline during the non-compete. Consider whether you'll have enough committed AUM from day one, or whether you need to start as an Exempt Reporting Adviser (ERA) and upgrade later. 2. **The dual-regime compliance burden is real but manageable.** Under Option B, one compliance program must address both FINMA/FinSA and SEC/Advisers Act requirements. The trade allocation policy is the most critical document — it must satisfy both regulators' equal treatment / fair allocation principles simultaneously, using a nationality-neutral pro rata methodology. This is entirely doable (many dual-registered firms do it) but requires more sophisticated compliance infrastructure than the two-entity structure where the problem doesn't exist. 3. **Personnel cost is deferred, not eliminated — and the RM revenue share makes break-even much harder than it first appears.** The no-salary structure keeps opex low (CHF 76,000–200,000/year), but with 60% of the 0.8% gross fee going to RMs, the firm nets only 0.32% on RM-sourced AUM. Break-even without salaries requires CHF 24–62M of RM-sourced AUM. With CHF 100k salaries each, break-even jumps to CHF 92–131M — a very high bar for a startup. The path to profitability requires building direct client relationships that bypass the RM revenue share as quickly as possible. The business plan should model the transition from RM-sourced to direct-sourced AUM over 3–5 years. 4. **Option B depends on the durability of the FINMA-SEC agreement.** The June 2025 arrangement is based on press releases, not a binding treaty. If a future SEC administration reversed course, you would need to restructure into Option A or C. The UK precedent (moratorium lifted 2020, still in effect) suggests this is durable, but the political risk is nonzero. Options A and C remain documented as fallbacks. --- ## 12. Next Steps (If You Decide to Proceed) 1. **Engage lawyers** — one Swiss regulatory lawyer, one US securities lawyer. Get a joint confirmation that Option B (single entity, dual-licensed) is appropriate for your planned activities, client types, and strategies. Ask them to flag any reason to reconsider Options A or C. 2. **Review your employment contract** — confirm non-compete scope, duration, enforceability, and any side-activity restrictions during employment. Check whether you are formally registered as a "qualified manager" with FINMA at your current firm — this confirms your experience profile is accepted. 3. **Meet 2–3 SOs** — AOOS, OSFINcontrol, and optionally SO-FIT or OSIF. Compare fees, culture, requirements. Inform them you're pursuing a single-entity dual-license (FINMA + SEC) structure with outsourced compliance. 4. **Get quotes from 2–3 compliance outsourcing firms** — SwissComply (you know them), Goldblum (boutique, likely cheapest), and one of BDO/Grant Thornton. Request written quotes for a small startup portfolio manager with long-only strategies and qualified clients. Scope: full outsourcing (AML officer, compliance, risk, ICS, SO liaison, audit prep). 5. **Identify a part-time qualified manager** — retired PM from your network (not current employer), Swiss-resident, fit & proper, 5+ years PM experience. ~10–20% time commitment, CHF 10,000–25,000/year board fee. Have arrangement ready before FINMA application. 6. **Model the financials** — use the Option B cost estimates (Section 8A/8B/8C) to build a 3-year P&L and cash flow projection. Use 0.8% gross fee with 60% RM share (0.32% net to firm) as the base case. Model the transition from RM-sourced to direct-sourced AUM over 3–5 years. Stress-test break-even AUM: CHF 24–62M (no salaries, 100% via RMs) vs. CHF 92–131M (with salaries, 100% via RMs). Show salary commencement timing — note that own funds may exceed the CHF 100,000 capital floor when salaries start. 7. **Begin AI-drafted documents** — priority: integrated compliance manual, trade allocation policy (most critical under Option B), business plan, Form ADV Part 2A, AML framework, risk management guidelines, mandate agreements for founders. This is the highest-leverage use of your non-compete period. 8. **Incorporate** — incorporate the Swiss AG, pay in CHF 100,000 capital, register in commercial register. Board: you + brother + part-time qualified manager (3 members). 9. **File applications** — at the end of the non-compete period, submit the FINMA application (via SO) and SEC Form ADV (via IARD) for the same entity. --- *This document is based on regulatory research as of August 2026. Laws, fees, and regulatory practices change. All regulatory determinations and legal documents must be reviewed and finalized by qualified Swiss and US legal counsel before filing. This document does not constitute legal, tax, or investment advice.*