How to Find the Right Trustee in Switzerland

Choosing the right trustee for your business is one of the most critical decisions you can make. In Switzerland, a “trustee” encompasses a broad range of essential roles and functions.

If you’re a business owner looking for someone to manage your company’s financial affairs and tax matters, finding a trustworthy and competent trustee is essential. This guide aims to help you sort through the maze of selecting a trustee, offering insights into what a trustee does, the challenges you may face, and how to ensure that your trustee is truly acting in your best interests.

What is a trustee?

In Switzerland, the best translation of the German term “treuhander” is “trustee” or “fiduciary”. In this context, a trustee broadly refers to any legal entity (natural or legal person) who represents the interests of another legal entity (i.e., the client).

While this can take a wide range of forms (including anything from tax consultants to architects), the term is typically used to describe someone who supports and represents their clients in financial matters. This can include tax advisors, accountants, management consultants, financial advisors, auditors, and more. There are many trustee firms in Switzerland that fulfil a combination of some or all the above roles.

 Trustees have a “fiduciary duty” to their clients, meaning that they are contractually obligated to always act in the client’s best interests, avoid embezzlement or other unlawful acts, and disclose all documentation to the client at any time it is requested.  

Why are there so many “bad apples”?

One of the challenges in finding a reliable trustee partner in Switzerland is the fact that the title “trustee” is not legally protected. This means that virtually anyone can call themselves a trustee, regardless of their qualifications, experience, or ethical standards.

The lack of regulation in this field has unfortunately resulted in many unqualified and unscrupulous individuals marketing themselves as trustee experts when they are, in fact, unequipped to handle the complex financial, legal, and business matters their clients entrust them with.

This creates the high risk of employing the “wrong” trustee, which can cause significant financial and reputational damage to your business. If your trustee provides subpar services, you are the one who suffers, not them. Wrong business decisions suggested by your trustee, failure to meet tax deadlines, and inefficient tax optimization strategies can all be seriously costly mistakes.

It’s therefore vital to pay close attention to the work that your trustee performs and not just take it for granted that they are providing the type of high-quality service you expect. Furthermore, you must exercise the utmost due diligence when selecting a trustee, ensuring that they have the necessary credentials, experience, and a proven track record of ethical conduct and high standards.

Is there such a thing as a “registered trustee” in Switzerland?

While the general job title of “trustee” is not legally protected in Switzerland, trustees may use the state-protected title of “Trustee with federal professional certificate” after completing specific training and a professional examination in the field of trust and fiduciary services.

For those who are concerned about the credibility of their prospective trustee partner, choosing a trustee with this certification can provide some level of confidence in the trustee’s qualifications and expertise. That said, it is certainly not a guarantee of high-class service.

Even if a trustee has this certification, clients should still perform their own due diligence. This includes checking the trustee’s reputation, asking for references, and verifying their track record. One of the primary functions of a trustee is to help their clients optimize their taxes, and that takes a great deal of experience and skill

How do you know your trustee isn’t doing enough?

It may be difficult to know for sure whether your trustee is adequately fulfilling their duties, especially if you’re not experienced in financial and legal matters yourself. However, there are several red flags that may indicate it’s time to consider finding a new trustee:

1. Poor communication

A reliable trustee should always maintain regular and transparent communication with their clients. If you find that your trustee is difficult to reach, fails to provide timely updates and replies, or is vague in their responses, it may be a sign that they are not fully engaged in managing your affairs.

Misunderstandings and lack of communication can have damaging legal consequences. A competent and responsive trustee is one that is accessible and readily available to address any of your concerns and keep you updated on important fiduciary matters.

2. High fees or unexplained charges

A good trustee is a highly trained expert, which does come at a price, but there are limits to what you should be willing to pay. Your trustee should take responsibility for managing your assets efficiently and transparently. If you feel that their fees are unreasonably high or notice unexpected charges without a clear explanation, it could indicate that your trustee is not handling your finances with the level of integrity required.

It’s essential to clearly establish the fee structure with your chosen trustee in advance to avoid any surprises, and to choose a trustworthy partner who provides you with transparent rates.

3. Missed deadlines and errors

A trustee who frequently misses important deadlines, such as filing tax returns or submitting financial statements, is not fulfilling their fiduciary duty. Such negligence can lead to serious legal and financial consequences for you as the client. Equally damaging is an unskilled trustee who makes errors in your financial reporting or in calculating your tax returns. This can result in losses if deductions and rebates have not been properly accounted for, and even penalties or legal action with the tax authorities in severe cases.

4. Conflicts of interest and ethical concerns

Trustees should always act in the best interests of their clients. It’s therefore essential to hire a trustee who doesn’t have any direct personal involvement in your financial affairs that could sway their decisions. If you suspect that your trustee is making decisions that benefit themselves or another party at your expense, it is a serious breach of their fiduciary duty and a clear sign that you need to find a new trustee.

Additionally, if you notice that your current trustee is engaging in any unethical practices, such as encouraging you to illegally evade taxes or providing advice which appears in contradiction with the law, you should act immediately. Finding an ethical and law-abiding trustee to protect your financial wellbeing should be your highest priority.

5. Inadequate expertise and advice

As mentioned, the job title “trustee” is not protected in Switzerland. This creates a higher risk of unqualified and incompetent trustees offering their services to unknowing clients.

If your trustee consistently provides poor advice or demonstrates a lack of knowledge in critical areas, it could indicate that they are not qualified to handle your affairs. This is especially concerning if their advice leads to financial losses or missed opportunities.

Tax laws and regulations are complex and always evolving. A competent trustee should stay up to date with these changes and have a deep understanding of how they apply to your specific situation

6. Outdated systems and procedures

In today’s fast-paced business environment, it’s essential for trustees to use up-to-date systems and procedures. If your trustee relies on outdated technology or processes, such as analog working methods and cumbersome paperwork, it could lead to inefficiencies, errors, and a lack of responsiveness to your needs.

Modern tools and practices are critical for ensuring accurate and timely management of your affairs. With advanced digital fiduciary and accounting services, you can directly synchronize your company’s internal accounting system with your trustee and thereby transmit important data in real time. Make sure you find a good trustee partner where smooth digitalized service is the standard.

7. No personalization

Every company’s needs are unique, and a one-size-fits-all approach simply won’t suffice. While most trustees can fulfil their bare minimum duties, when it comes to offering sound, personalized advice, many fall short of the mark.

If your trustee doesn’t take the time to understand your specific situation and tailor their services accordingly, it’s a sign of laziness that shows they may not be fully committed to providing the best possible service. Personalization is key to ensuring that your trustee is truly acting in your best interests and helping you achieve the most optimal financial outcomes.

So, what next? Can you change your trustee?

So, what happens if you’ve come to realize that your current trustee isn’t meeting your expectations? Can you just switch to a new one?

The good news is: Yes, you have the right to change your trustee at any time if you feel your needs are not being properly met. In fact, if you are faced with this situation, changing your trustee is the only logical choice.  

If you have built up a long-term relationship with your current trustee, making the change may feel difficult, but it’s the only way to save your business from further damage and inefficiency. With careful consideration and planning, you can ensure a smooth transition.

Changing to a new trustee involves the following stages:

1. Review your contract with your current trustee: Many agreements will outline the process for terminating the relationship, including any notice periods or penalties for early termination. It’s essential to follow these procedures to avoid any legal complications.

• Find and engage a new trustee: Once you’ve decided to change trustees, you need to carefully identify a new one who can better serve your needs. This involves thorough research, including seeking recommendations, discussing your expectations with potential candidates, and reviewing their credentials. We’ll discuss in more detail what you should look for when selecting a new trustee.  

• Transfer documents and assets: Finally, ensure that all necessary documents and assets are transferred from your old trustee to the new one. This process should be handled with care to avoid any disruption in the management of your affairs.

Speak to your new trustee for guidance on the best approach to handling the changeover, and what data they require from your previous trustee. They will likely need at least the following:

• A presentation of your financial situation.
• Annual accounts, including income statements and balance sheets for the last three years.
• Statement of accounts including fixed assets.
• List of open items with customers and suppliers.
• Business reports.
• Employment contracts and agreements, including pay slips, social security contribution statements, and wage tax registrations.
• Income tax returns for the current and previous years.

What should you look for in your new trustee?

Finding the right trustee involves more than just checking their qualifications. You need to be clear about what qualities are most important to you, and your specific expectations for your new fiduciary partnership.

Here are some key factors to consider when evaluating potential trustees in Switzerland:

• Expertise and experience: You should look for a trustee who has the appropriate qualifications and experience in Swiss tax and accounting regulations, and a proven track record in managing assets similar to yours. Good indicators are professional certifications, years of experience, and specialization in areas which align with your specific requirements and industry.
• Reputation and references: Check the trustee’s reputation within the industry and ask for references from previous clients. A trustworthy trustee will have a history of satisfied clients who can vouch for their integrity and professionalism. Try to get recommendations from trusted sources, such as friends and family, or professional networks.
• Transparency and communication: A good trustee should be transparent in their dealings and maintain open lines of communication. They should provide regular updates and be willing to explain their decisions and actions in a way that you can understand.
• Fee structure: Inquire about the trustee’s fee structure upfront and make sure it matches your budget and expectations. Consider the value you will receive from their services and the potential savings they can provide, and weigh these against the costs.
• Flexibility and adaptability: The financial landscape is constantly changing, and a good trustee should be able to adapt to new circumstances and challenges. Look for someone who is proactive in identifying potential issues and finding solutions that fit with your unique goals.