AUM growth is only a “second priority”

AUM growth is only a “second priority”

When describing the Pictet Group, three words – independent, organic, and partnership – come to mind. The Swiss pure play, whose history in Asia dates back to 1981, is owned and managed by eight managing partners.

New partners are appointed every five to ten years, with the youngest ones in their early 40s, and the most experienced ones generally aged between 55 and 65. In 2006, for the first time, Pictet gave a select circle of 40 top managers a minority equity share in the business.

“Together, we own 100% of the group,” managing partner Marc Pictet told Asian Private Banker. “We are not accountable to external shareholders, so AUM growth is only the second priority, while delivering superior results for clients is paramount.

”What sets Pictet apart, according to Marc Pictet, is the partnership model which promotes long-term thinking.“ Individually, we may not be the smartest, but collectively, maybe. The eight of us function very well and very sustainably as a team, with our different backgrounds, skill sets and ages.

”Marc Pictet has direct responsibility for the Pictet Wealth Management (Pictet WM) division. He is chairman of the Board of Directors of Pictet & Cie (Europe) SA.

Growing contribution from Asia During his recent visit to Singapore, Marc Pictet, along with Pictet WM’s Asia CEO Tee Fong Seng, sat down with Asian Private Banker to give a sense of the Asia wealth business.

“Our story is a simple, but powerful one,” Marc Pictet said.

In 2021, the group reported a 13% rise in operating income to CHF 3,251 million, and a 75% rise in consolidated net profit to CHF 1,008 million. Group assets under management or custody rose by 15% to an all-time high of CHF698 billion, with net new money amounting to over CHF29 billion.

“We’re not into acquisitions,” he shared. “Our growth is organic, and we intend to grow organically as we have done since 1805. In Asia, we have the right wealth management platform and investment leadership and can also draw on the strength of our asset management and alternatives businesses.

”Singapore and Hong Kong are the bank’s key wealth hubs, where AUM increased around 25% in 2021 and net new money gained 30%. Asia wealth management revenue increased 17%. Pictet does not disclose actual figures for wealth management.

“We’re not into acquisitions. Our growth is organic, and we intend to grow organically as we have done since 1805. In Asia, we have the right wealth management platform and investment leadership and can also draw on the strength of our asset management and alternatives businesses.”

— Marc Pictet, Managing Partner


Winning the SFO game

Focused on serving UHNWIs and families, about 70% of the wealth manager’s AUM is from large wealth clients and single-family offices with above CHF 50 million in assets. The remainder are HNW and UHNW clients with between CHF 5 million and CHF 50 million.

“We are definitely winning the game in single-family offices,” said Tee, a veteran private banker. The wealth management arm does not work with intermediaries such as external asset managers.

“Our four core markets are Singapore, Hong Kong, China and Taiwan. China is at an inflection point, but the amount of wealth creation is one that we cannot ignore.

“The number of Chinese family offices set up in Hong Kong and Singapore is increasing, so we have to have the nexus into China to capitalise into Hong Kong and Singapore for the family offices,” Tee explained.

Pictet is similarly looking to bring its wealth expertise to other Southeast Asian markets, as well as tap into the non-resident Indian (NRI) segment. Last October, the group partnered with Bangkok Bank to provide wealth management services to the latter’s clients in Thailand.

Asked what the growth plans are for this year, Marc Pictet said: “We couldn’t care less about growth this year. We have been here for 40 years and we intend to be here for the next 40 years and beyond.”


No product pushers

A key focus for Pictet when hiring bankers is to ensure candidates are a strategic fit for the bank’s partnership culture and value proposition. In other words, classic product pushers will not make the cut, but those with a client-led, entrepreneurial spirit will fit in.

The Group does not like “cutting corners” or “forcing growth”, emphasised Marc Pictet, as “the main responsibility of a banker is to find the right solutions for clients and evolve through time with the next generation of the family”.

He added that “if a banker is all happy because he or she has placed US$15 million into a structured product and hit budget, I won’t see that as success if it’s just for the P&L [profit and loss]”.

Last year, the number of relationship managers (RMs) in Pictet’s Asia wealth management business grew by 10% to75 across Singapore and Hong Kong. It hired a slew of senior private bankers covering Greater China and the Philippines markets, and made senior appointments for North Asia and South Asia. This year, the bank welcomed anew Greater China market group head.

Marc Pictet considers staff turnover to be low. “We are currently at 7% and that’s high for us,” he said. “Usually we’re around 5%. Nobody is perfect, but the one thing we do right is offer a great environment for our people.”


Partners as testers

In Asia, over 50% of Pictet’s wealth management assets are in managed solutions across mandates and funds. Clients have access to its full suite of global discretionary services, from multi-asset to single-asset strategies, as well as locally managed DPM mandates.

Solutions launched by Pictet WM include mandates for Singapore REITs, Credit Opportunities, US Upper Tier High Yield and Fixed Income Expert.

When looking at benchmarks and the median of its competitors, Marc Pictet shared that over three and five years, more than 70% of its portfolios are above the former and over 90% above the latter.

Whenever the Group launches a strategy, Marc Pictet said, the partners invest their money first to test the strategy, the investment process and the results. If it works, then they offer it to clients.

“In the case of portfolios not doing well, we look at the market conditions and the investment process to determine the problem. If we come to the conclusion that the approach is not right for the long term ... we close it.

”Separately, the Pictet Investment Office, which is a dedicated investment team for UHNWIs, offers customised mandates that start from CHF 100 million. These strategies — designed for long-term value creation — are aimed at clients who have no liquidity constraints and can stomach short-term drawdowns.


Alts take flight

Based on the group’s latest 10-year view on market developments and strategic asset allocation, Marc Pictet said alternative investments are expected to generate the highest return.

“One reason is because we’re convinced that it will be quite challenging to make money in fixed income,” he said. “Equities will remain attractive for long-term investors, but there will always be volatility.”

He added that for clients, depending on their liquidity needs, they may have 20-30%, if not more, allocated to alternative assets as part of a diversified portfolio.

Pictet’s alternatives mandates start from US$10 million. Capacity tends to be an issue with alternative products, but Pictet benefits from good access to managers.

“We’ve been in it for the last 40 years,” explained Marc Pictet. “First with hedge funds then private equity, and more lately real estate. We have vastly increased our expertise in this field in the last five years.”

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