What it is about
Client segmentation is the first step of every FinSA-compliant client relationship. The segment determines which information, appropriateness and suitability, and documentation duties apply. The supervisory organisations review segmentation processes as one of their audit priorities, as our article on the 2026 supervisory review shows. This article explains the three segments, how clients move between them and how to build a process that holds up in an audit.
The three segments
| Segment | Who belongs to it (Art. 4 FinSA) | Level of protection |
|---|---|---|
| Retail clients | all clients who are not professional clients | full rules of conduct |
| Professional clients | for example financial intermediaries, supervised insurers, public entities, pension schemes and companies with professional treasury operations, large companies and private investment structures with professional treasury operations | knowledge, experience and risk capacity may be assumed (Art. 13 para. 3 FinSA); the client may release the provider from Arts. 8, 9, 15 and 16 FinSA (Art. 20 para. 2 FinSA) |
| Institutional clients | financial intermediaries, supervised insurers, foreign prudentially supervised clients of these types, central banks, and national and supranational public entities with professional treasury operations | the rules of conduct of FinSA chapter 2 do not apply to transactions with them (Art. 20 para. 1 FinSA) |
A large company exceeds two of three thresholds: balance sheet total of CHF 20 million, turnover of CHF 40 million, equity of CHF 2 million (Art. 4 para. 5 FinSA). Companies of the same group that receive a financial service from another group company are not considered clients (Art. 4 para. 6 FinSA).
Opting out and opting in
- Opting out to professional status: high-net-worth retail clients and private investment structures created for them may declare that they wish to be treated as professional clients (Art. 5 para. 1 FinSA). High-net-worth means either assets of at least CHF 500'000 plus the knowledge needed to understand the risks, based on training and professional experience, or assets of at least CHF 2 million (Art. 5 para. 2 FinSA).
- Opting up to institutional status: pension schemes and companies with professional treasury operations, as well as certain collective investment schemes and their management companies, may declare that they wish to be treated as institutional clients (Art. 5 paras. 3 and 4 FinSA).
- Opting in to more protection: professional clients who are not institutional clients may choose to be treated as retail clients; institutional clients may choose professional status (Art. 5 paras. 5 and 6 FinSA).
- Information duty: before providing any financial service, the provider informs clients who are not retail clients of the possibility of opting in (Art. 5 para. 7 FinSA).
Special cases in practice
- Joint clients: where several clients are entitled to assets, they are assigned jointly to the segment with the greatest protection (Art. 4 para. 1 FinSO).
- Authorised representatives: clients acting through an authorised person may agree that the segment follows that person's knowledge and experience (Art. 4 para. 2 FinSO).
- Joint opting-out: clients holding assets jointly can declare an opting-out only together, and at least one of them must have the required knowledge (Art. 5 paras. 3 and 4 FinSO).
- Client adviser register: according to FINMA, high-net-worth retail clients who have opted out still count as retail clients when assessing the registration duty of foreign client advisers; see our article on the Swiss client adviser register.
Step by step: a segmentation process that holds up in an audit
- 1Collect data at onboardinglegal form, regulatory status, financial key figures and, for individuals, eligible assets and knowledge.
- 2Assign the segmentapply the criteria of Art. 4 FinSA and record the result with the date and the evidence used.
- 3Inform the clienttell professional and institutional clients about the possibility of opting in.
- 4Handle declarationsobtain opting-out or opting-in declarations in writing or in text form and file them with the client record.
- 5Apply the right ruleslink the segment to the information, suitability and documentation steps in your process.
- ✓Review regularlycheck segments when the client's situation changes and as part of periodic reviews and internal controls.
Checklist
- Segmentation criteria documented in a directive
- Onboarding form captures all data needed for segmentation
- Evidence for professional or institutional status filed
- Opting-out declarations with proof of eligible assets and knowledge
- Information on opting in given and documented
- Rules for joint clients and authorised representatives defined
- Segment visible in the client record and linked to the suitability process
- Second-line control of segmentation in the internal control system
How Peak Compliance supports you
Peak Compliance designs your segmentation process, drafts the declarations and checks client files as part of compliance outsourcing. Client advisers who need an entry in the Swiss client advisor register can complete the FinSA training online with Peak Compliance. The FinSA framework is summarised in our FinSA knowledge hub, and the FINMA expectations on conduct duties in our article on FINMA Circular 2025/2. For a first conversation, reach us via the contact page.
