Retrocessions in practice: implications for private banks and clients

Focus and objective#

This post translates Abegglen’s doctrinal framework and the Federal Supreme Court’s 2024 clarifications into practical action points for financial institutions and clients. The focus is on governance, documentation and implementation across discretionary wealth management, investment advice and execution-only models.

Retrocessions as an incentive-governance issue#

Abegglen frames retrocessions primarily as an incentive and conflict-of-interest issue, not as a standalone enrichment problem. For institutions, this means embedding retrocessions into existing conflict-of-interest and remuneration governance rather than addressing them solely through contractual clauses.

Clear segmentation of relationship types#

The 2024 case law confirms, as highlighted by Abegglen, that wealth management, investment advice and execution-only relationships require differentiated treatment. In practice, this implies:

• clear contractual and operational separation;

• avoiding “grey-zone” setups with de facto discretion labelled as execution-only;

• consistent reflection of segmentation across documentation and systems.

Court-accepted disclosure and waiver architecture#

Abegglen shows that “industry-standard disclosure” is workable if implemented correctly. Key elements include:

• percentage bandwidths by product/investment category rather than per-fund disclosure;

• clear explanation of calculation base and periodicity;

• transparent documentation of the relevant “Eckwerte”;

• clean integration of disclosure into contracts or clearly referenced annexes.

AGB, repapering and retroactive waivers#

The acceptance of retroactive waivers and the characterisation of retrocession waivers as not objectively unusual have significant practical consequences. Institutions should:

• review existing AGB clauses for clarity and scope;

• undertake structured repapering where legacy clauses fall short;

• distinguish clearly between retroactive and forward-looking waiver elements.

Handling client inquiries and record-keeping#

Abegglen notes that clients are entitled to request more detailed information at any time. From a practical standpoint, institutions should therefore:

• implement defined processes for retrocession-related inquiries;

• apply consistent response standards;

• document inquiries and responses as part of the conflict- and waiver record.

This is particularly relevant in disputes involving sophisticated clients and good-faith considerations.

Client perspective#

From the client’s perspective, Abegglen’s analysis shows that a waiver can be legally robust if informed. At the same time, clients should be aware that failing to make inquiries despite having the opportunity to do so may later weaken their position.

Practical takeaways#

Based on Abegglen’s contribution, the key practice points are:

• treat retrocessions as an incentive-risk issue;

• segment relationship types rigorously;

• implement and document industry-standard bandwidth disclosure;

• actively manage AGB waivers and repapering;

• operationalise and document client inquiries.

References#

• Abegglen pp. 2, 7–11

Regulatory notice#

This publication is provided for information purposes only and does not constitute legal, tax or investment advice. It is not an offer, solicitation or recommendation. It is directed solely at qualified investors in Switzerland and is not intended for U.S. persons.