Tied or Untied: What You Should Consider When Choosing Your Insurance Advisor
Published on 2025-10-22
The Financial Market Supervisory Authority FINMA has aimed to enhance the quality and protection for private clients in the financial advisory landscape of Switzerland with the VAG revision. But what exactly does the VAG revision mean, and what are the differences between tied and independent intermediaries?
What is the VAG revision?
The VAG revision is a revision of the Insurance Supervision Act (VAG), which regulates the activities of intermediaries in the insurance sector. The aim of the revision is to introduce stricter rules for the qualification and behavior of intermediaries to improve customer protection. Intermediaries must meet new requirements regarding education, further training, and transparency in compensation.
Tied and independent intermediaries – what is the difference?
A tied intermediary is an advisor who is contractually bound to one or more insurance companies and primarily offers their products. Their recommendations may therefore be influenced by the interests of the company they work for.
An independent intermediary, on the other hand, works independently of insurance companies and has access to products from various providers. This allows them to provide more objective advice and act in the best interest of the client. However, the VAG revision imposes stricter requirements on independent intermediaries, while tied intermediaries are partially exempt from these.
Unequal conditions
The revision imposes strict requirements on independent intermediaries: education and training, transparency in compensation, and detailed disclosure of their working methods. These measures aim to enhance the quality of advice and strengthen customer protection. But why are these strict requirements not also applicable to tied intermediaries?
Tied intermediaries are often bound to corporate goals that are translated down to them and frequently overlap with the goals of the client. In this environment, it would be particularly important to create the same conditions as for independent intermediaries – especially regarding transparent, commission-based compensation models that can put the advisor in a potential conflict of interest.
Lack of representation for private client brokers
The negotiations for the VAG revision were primarily conducted with the Swiss Broker Association SIBA. Here lies the core problem: SIBA mainly represents large client brokers who specialize in corporate clients. Private clients, who have the greatest need for protection, were largely overlooked.
Why were not the leading private client brokers or innovative startups that advocate for financial education and advisor-autonomous services included in the negotiation process? Similarly, the Swiss Financial Planner Association, which possesses the expertise to represent the interests of private clients, was not consulted.
Protection for private clients remains patchy
The fundamental idea of the VAG revision – to improve protection for private clients – is commendable. However, in its current form, the implementation remains half-hearted and leaves many questions unanswered. There is a lack of a balanced approach that holds both tied and independent intermediaries equally accountable. The actual needs of private clients are sidelined while regulatory hurdles for independent intermediaries continue to rise.
Solutions for fairer regulation
To make the VAG revision fairer and more effective, the following solutions should be considered:
Equal standards for tied and independent intermediaries: The requirements for education and training, transparency in compensation, and consideration of client goals must apply equally to all intermediaries – both tied and independent. This would reduce conflicts of interest and overall enhance the quality of advice.
Involvement of relevant stakeholders: It is essential that future negotiations on regulatory changes also include private client brokers, independent financial planners, and startups advocating for financial education. These stakeholders are closer to the needs of private clients and could contribute valuable insights to the discussion.
Clearer definition of commission models: To avoid conflicts of interest, clear and transparent rules for commission-based compensation should be established. These should be designed to ensure that advisors primarily act in the best interest of the client without falling into conflict situations due to internal corporate directives.
Better continuing education opportunities: The financial industry is rapidly evolving, especially in the area of digital services. Intermediaries should have access to practical and future-oriented continuing education offerings that not only cover regulatory requirements but also include topics such as digital advisory tools and sustainable financial planning.
Conclusion: What should you, as a client, pay attention to now?
The VAG revision is a step in the right direction, but there is still room for improvement. Until the desired adjustments are implemented, you should be particularly vigilant as a client. When working with an advisor, specifically ask whether they are tied or independent. Independent intermediaries can often offer a broader range of products, while tied intermediaries may be more focused on specific insurers.
Demand transparency regarding the advisor's compensation models – for both independent and tied intermediaries. It is important to know whether and how commissions could influence the advice. Ensure that your financial interests are at the center of the advice and not the corporate goals of the intermediary.
With these precautions, you can better navigate and benefit from the reform while the regulation is still being refined.