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Industry strategic challenges
With continuous growth of more than 70% over the past five years, PSF are developing rapidly. Indeed, Luxembourg counts around 300 PSF in 2010, compared to 170 in 2004.
To some extent, this strong development of the market for the PSF industry reflects the "conversion" of former players which have taken the steps to get accredited, combined with Luxembourg's attractive business environment.
This development has been driven primarily by legislative changes. One of the latest to date concerns the law of 13 July 2007, which transposed the Markets in Financial Instruments Directive (MiFID) into national law. In addition to transposing the directive, the Law introduced five new categories of PSF.
Pourquoi le Luxembourg?
Although we believe that the impact of PSF always seems to have been underestimated in the past in relation to banks, the level of value added per employee for PSF is remarkably similar to that of banks. PSF account for almost one third of jobs in the financial industry.
PSF activities employ 14,200 people according to the CSSF's latest estimates, as at 31 March 2012, while banks employ "only" twice as many people.
PSF industry is ranked as the second largest employers in Luxembourg's financial industry.
PSF typically have a high level of freedom to make decisions independently, highlighting their independence in relation to the products they offer, the leeway open to them and generally their highly experienced staff driven by an entrepreneurial approach. In addition, some of them now have a European passport, which notably enables them to be less affected when clients change countries, keeping their mandates and the corresponding revenues.
PSF often have international backgrounds, enabling them to meet the needs of their clients more easily by considerably expanding their horizons and the experiences they are able to draw on for them. Moreover, Luxembourg benefits from highly professional supervision, further strengthening the credibility of PSF. Investment companies PSF with a european passport have considerable flexibility in relation to the location of their clients in Europe.
Furthermore, Luxembourg is always flexible and open to new concepts. Recently for instance, the Luxembourg Association of Financial Management Professionals (ALPP) participated in the creation of the Luxembourg Association of Family Offices (LAFO). The players involved hope to obtain a new type of accreditation to regulate this status for a business which looks certain to become increasingly important over the coming years and decades.
While some might refer to the future of banking secrecy, the automatic indexing of salaries in Luxembourg or even the financial crisis, the real challenges facing PSF lie in the development of a genuine personal relationship with the client, in the packaging of value propositions and services that are in line with clients' actual requirements. This involves rallying together staff who are focused on serving the client, who take the time to regularly consult with them, listen to them and apply the caution required in the activities performed. To achieve this, a strong level of experience is vital in order to build up real knowledge of the market.