Interview with Elif Aktuğ, Managing Partner

Interview by Anne-Barbara Luft, Bilanz

Leuenhof on Paradeplatz was built in 1913 for Bank Leu. It features high ceilings, plenty of marble and an imposing column depicting Hercules in the lobby.

Since 2021, the historic building has housed the Zurich branch of the Geneva-based private bank Pictet, having been fully restored and fitted with modern, yet understated, interiors. Elif Aktuğ is usually based at the head office in Geneva, but the CEO of Alternative Advisors and Co-Head of Wealth Management is in Zurich for a few meetings and has taken the time to give an interview. She is the first woman to join the Board of Partners in Pictet’s more than 200-year history.

The private equity sector is facing a crisis. Exits are largely stalled and hardly any capital is flowing back. How concerned are your clients?

Private assets are a cyclical asset class, characterised by peaks and troughs. Over the past decade, distributions were very high. Then we went through a trough, but now things are picking up again. Distributions are accelerating, particularly this year.

So there’s no material crisis?

There are still a great many opportunities, both globally and, in particular, in the European mid-market sector. If you look at some of the most recent IPOs, it is also clear that a large proportion of value creation actually takes place in private markets – before a public listing. The underlying growth drivers and market penetration remain fully intact.

Are exit strategies now changing?

Definitely. Stock market listings are cyclical. There are periods when there is a real boom in IPOs, and perhaps we are seeing the start of one right now. And there are times when things are more challenging. That’s why it’s so important to assess your exit options ahead of investing in private equity. We don’t commit capital to investments that depend solely on an IPO.

What do you look for instead?

The companies must either be of strategic interest to other buyer groups or of a manageable size so that another private equity firm can come on board and drive the next stage of value creation. Our analysis of these drivers is precisely where we add value.

There’s now a push to open private markets to retail investors. What is your view?

The democratisation of private assets is a big talking point. However, taking an increasingly short-term view of these investments is risky. If someone has a foreseeable need for liquidity, private assets are not the right option. The higher returns on private markets are, in part, compensation for illiquidity.

Yet many retail investors are looking to spread risk through private assets.

Holding private assets alongside liquid investments in a portfolio is, of course, an excellent way to spread risk. That said, it is not necessarily suitable for all types of investor. Investors have to be absolutely clear about how long they can tie up their capital so that the value creation which drives these returns can actually take place. The compounding effect is significant, and it would be a great shame to leave that on the table.

Pictet is a pioneer in thematic investing. The launch of its Water fund 25 years ago is just one example. What megatrends do you see today?

Three segments stand out: technology, healthcare and the environment. The impact of these trends is most strongly felt in private markets when they are combined. Take artificial intelligence and healthcare, for example. That’s where you unlock interesting opportunities for tailored solutions. On the environmental side, the energy transition is playing an increasingly important role in private markets. This offers investors the opportunity to combine a positive social impact with attractive returns.

How do you tell the difference between long-term trends and short-lived hype?

Firstly, we have advisory boards comprising experts from the academic world and the business sector. We also marry financial expertise with specialised domain knowledge. Our private equity team covering the healthcare sector is made up of scientists, each with PhDs in different fields of medical research. The third pillar is disciplined portfolio construction, which focuses on diversification. We don’t chase every trend; we’re extremely selective in how we allocate capital.

By 2035, an estimated CHF 1 trillion is set to be inherited in Switzerland alone. Is Pictet ready for the Great Wealth Transfer?

Yes. Pictet itself is a multigeneration firm – now with the ninth generation of the family at the helm. We have been serving some of our client families for five generations. So, we’ve actually been through this transfer process ourselves. Many clients are considering how to pass on their wealth, for example through trusts and foundations. But successors also need to be prepared for their inheritance. That’s exactly what we advise families on. Not everyone has to take on the same role. Some may be involved in the family office, while others define the family’s values or ensure that everyone is involved.

Does the younger generation have different expectations of a bank’s role?

Definitely. There’s no one-size-fits-all model. The group of successors is very diverse. When we think of the “Next Gen”, we often picture twenty-year-olds. In practice, the next in line are often in their sixties. They might also be a surviving spouse. Their expectations and interests are completely different. Some are passionate about sustainability, others are interested in crypto-assets, while others again remain committed to traditional philanthropy.

Women are set to be the winners of this transfer. What does that mean for your sector?

Women tend to view their wealth differently than the traditional patriarch. With our female clients, we see greater emphasis on issues such as sustainability, impact investing, philanthropy and the active involvement of future generations, as well as on including a wider family circle. There’s typically a very long-term perspective underpinning this and a desire to align financial returns with meaningful positive social impact.

Will this great transfer of wealth fundamentally reshape wealth advice?

Women are driving this change, but they are not doing it alone. Investment advice is also being influenced by a new way of thinking among younger generations. Sustainability is now firmly part of the discussion. This is not a revolution that has happened overnight, but a steady change that we sense in our day-to-day conversations with clients.

You mainly engage with ultra-high-net-worth individuals. How do these investors differ from retail investors?

They have the luxury of time. They do not need to time the market over the short term. They can hold investments in the public and private markets over very long cycles. This long-term perspective, combined with a diversified strategic asset allocation, is what sets their approach apart from that of the typical retail investor.

Has the need for security among your wealthy clients increased?

Yes. Many clients want to diversify not only their investments but also the locations where their assets are physically held. Geographical diversification of banking centres is a must. This is where we are well placed. Switzerland is renowned worldwide for its expertise and political neutrality, and is regarded as a safe haven.

Does “Swissness” still hold appeal?

Very much so. We see this every day.

Did the collapse of Credit Suisse have any negative impact?

Perhaps in the short term. But the Swiss financial centre is much stronger than that single event. Internationally, our expertise continues to be held in extremely high regard.

Your partnership model at Pictet is unique, particularly the way decisions are reached by consensus without formal voting. Does this mean very long debates?

As we have no external shareholders and are accountable only to ourselves and our clients, we are in the fortunate position of being able to take time. If something does not feel absolutely right, we don’t go ahead with it.

That sounds rather time-consuming.

We take time to find the best solution, but once a consensus has been reached, we are quick to implement it. The beauty of this collective approach is that whenever I enter a Board of Partners meeting with two options and we examine the issue from all angles, we invariably settle on a third option that is much better. Bringing together different areas of expertise, cultural backgrounds and ways of thinking leads to higher-quality decisions.

The Board of Partners has only become this diverse in recent years. It is younger, more international and, with you joining, more gender diverse. What has changed as a result?

The ethos remains absolutely unchanged. Decision-making by consensus is the one unshakeable constant. And it doesn’t matter whether you are a woman or a man – every vote carries the same weight. It’s really about the diversity of experience and thought, underpinned by the same fundamental values.

How often do all the Managing Partners meet?

We meet three times a week for almost half a day.

Are the meetings always held in Geneva?

We all travel a lot, of course, but we try to schedule our long-haul flights so that they do not fall on meeting days. We only make really big decisions when everyone is in the room.

You grew up in Ankara, London and Paris. How did growing up in an international environment shape you?

It showed me how important different perspectives are. You learn to be independent at a very early age and to adapt quickly to new surroundings. Being able to read a room becomes a vital skill when you change countries and schools so often.

Do you remember the first time you attended a Board of Partners meeting?

Yes, of course. My first thought was that I still had a lot to learn. What fascinated me from day one, however, was the collaborative culture. The very first week, an experienced Managing Partner asked me for advice. That really took me by surprise, and it was a real eye-opener. I was able to make an impact from day one, while continuing to learn at the same time.

You’re a role model for many women in the Swiss financial sector. Do you support women at Pictet?

I was a founding member of the Pictet Women’s Network long before I became Managing Partner. There were eight of us on the first steering committee. Today, it is one of Pictet’s most influential employee networks. For young female colleagues, this community is a source of inspiration. But the same is true for the men who are also in the audience at our events – something we encourage.

Men attend events of a women’s network?

This is hugely important because they, too, lead teams that include talented women and want to understand how they can support them. We invest a great deal of energy in mentoring programmes to ensure that young talent – whether women or people from other underrepresented groups – can thrive at Pictet. I am not the only one focused on this topic; it is firmly rooted in everyone’s minds. I also have three daughters. I have to set an example every day anyway, not just within the financial community.

What advice would you give to someone starting out in the financial sector?

Stay infinitely curious! And – this point applies particularly to young women – choose your life partner carefully, so that you both have the same career opportunities.

Is having the right partner at home just as important to your career as your professional colleagues?

I have benefited enormously from the fact that both my colleagues at the bank and my husband had complete faith in my professional abilities. Apart from pregnancy and childbirth, there was nothing my husband could not do. We were on a completely equal footing. This is a key factor for young women in this demanding sector.