Marc Pictet interview in Finanz und Wirtschaft

Interview by Bastian Heiniger, Finanz und Wirtschaft

Mr Pictet, you have now been Senior Managing Partner for one and a half years. What are you doing differently from your predecessor, Renaud de Planta?

At Pictet, continuity is the top priority. Thanks to our model, we are able to evolve steadily over time without having to make abrupt changes in direction. Of course I have my own leadership style, but the strategy itself is a collective effort.

You now chair a Board that has undergone arguably the most profound changes in its history over the past four years (see box): one board member, brought in from outside and on whom great hopes were pinned, left prematurely, the first women joined the partnership and long-serving veterans transitioned to the Supervisory Board. Has modernisation moved faster than long-term planning envisaged?

Change has always been part of our story and always will be. We currently have seven Partners; historically, the number has always fluctuated between six and nine. That said, I would agree that there has been a rejuvenation and diversity has increased. Our Collège – as we call the Board – has never been so young and is highly motivated.

Are there plans to expand the Board to nine?

Not at present, though the composition of the Board is part of our ongoing strategic considerations. The strength of the Pictet model lies precisely in the fact that we are both managers and owners. We are not CEOs who move on after two years. We have just completed our five-year plan and defined the new one for 2030.

What does it entail?

We have identified long-term trends that have helped us to define our strategic objectives. A central theme is the rise of Asia. This is not new for us – we have been present in Hong Kong for 40 years and in Singapore for 30 – but we want to strengthen our position there significantly. Another growth area for us is private assets. This industry is undergoing fundamental change and we update our market outlook for the next 10 years on an annual basis to reflect that. Our analysis points to private equity as particularly promising in terms of return potential.

Why is that?

It essentially comes down to one word: time. In a private company, you have time to implement a strategy consistently, to develop technology in depth, to recruit the best people - and to do so without the constant pressure of having to deliver results every quarter.

What role does geopolitical instability play?

A decisive one. We are paying very close attention to global debt, among other things. The enormous debt burden carried by many countries, especially the US, will be with us for some time. This, in turn, leads to another theme: the possible de-dollarisation of portfolios as investors seek to diversify their holdings from a geopolitical perspective. Cyber defence and instant finance are also gaining in importance. In a world where everything is in the cloud and transactions are processed instantaneously, we need to radically protect and adapt our infrastructure. From a societal perspective, we are also seeing a strong fragmentation of the world order. We believe capitalism needs to be rethought.

That sounds quite revolutionary. What do you mean by that?

We are thinking in terms of responsible capitalism. We are observing long-term trends that will have a massive impact on the fabric of our society. A key factor is the decline in population growth. As populations age and shrink, consumption patterns and labour markets will change fundamentally. We must therefore ask ourselves: how do we, as financial players, manage capital responsibly so that it not only generates returns but also supports the foundations of society?

That sounds more like a social project than return-driven banking.

On the contrary, it is an economic necessity. For us, responsible capitalism means understanding the implications of these meta-themes for the next five to 10 years. It is about how consumers behave in an ageing society and what role technology plays in that context. Higher productivity through AI is one answer to the demographic challenge. With a shrinking population, we can only maintain prosperity by becoming more productive.

How difficult is it to position oneself in this rapidly changing world with new power blocs?

As an investor, it is important to separate the noise of daily headlines from the actual substance and true value of companies. We invest in businesses, not in headlines. The fragmentation of the world presents its own opportunities. New alliances and dynamics are emerging. Despite all the tariff conflicts and tensions between the US and China, globalisation has not come to a halt – it is just being reordered. Europe has a great opportunity here to reposition itself with partners in India, Southeast Asia and the Middle East.

What about Switzerland? Where do its opportunities lie?

Switzerland boasts incredible talent and first-class technological expertise. However, production costs are high. Since our foundation, we – as a Swiss company – have strived to achieve that crucial marginal gain in productivity each year. With artificial intelligence, incremental gains are no longer enough – we need to make a quantum leap in productivity. The opportunity is huge, but time is pressing.

Can you give an example of where this progress is already tangible?

Take biotechnology, a field in which we have been active for over 20 years. Our portfolio managers are convinced that the combination of biotechnology and AI offers ground-breaking possibilities – and not merely from an investment perspective. Above all, it presents significant opportunities for patients. We can develop drugs much faster and bring them to market more quickly, and approval processes are also accelerating markedly. The intersection of these two fields is a key focus area for us.

To what extent are you using AI in the investment process?

Two years ago, we launched a range of funds called QuestAI, which invest exclusively using an AI-driven model. The model analyses more than 400 parameters for each company and generates signals. The results after two years are impressive. Since the launch, we have outperformed the benchmark by an average of 2% net of costs.

To respond to technological disruption, you have set up a tech hub in Lisbon. Why does Pictet need its own software development centre?

Ultimately, we work with data – client data and investment data. We need to ensure that the data are fully secure, while at the same time making them accessible to our portfolio managers and advisers worldwide. Our work also involves a large number of operational processes, all of which are supported by technology. Like all companies, we are in the process of cloud adoption, but there are core areas we want to keep in-house.

Why Lisbon?

Despite excellent universities, it is difficult to find enough IT talent in Switzerland. We identified Portugal as an interesting location. Not only are there outstanding local professionals, but Lisbon is also a magnet for talent from Latin America, in particular from Brazil.

You have spent a significant part of your career in Zurich. Is Zurich now where the action is, while Geneva remains something of a nostalgic home?

I prefer to talk about Switzerland as a location. We made a decision several years ago that Zurich had to become our second home. We have invested heavily in personnel and visibility. There used to be a certain imbalance, but we have corrected that. Today we conduct business here with major pension funds and family businesses that we could only have dreamed of 20 years ago.

In recent years, your cost-to-income ratio has often been comparatively high – well above 70%. Does this point to structural inefficiency?

At an average of around 73% over the last five years, we compare favourably with our competitors. That said, we are investing heavily in talent and infrastructure. Take our new main building in Geneva, the Campus Pictet de Rochemont. It will be one of the most sustainable buildings in Europe. These are investments made not for the next quarter, but for the next generations. As owner-managers, we can afford this long-term perspective. For us, this matters more than the short-term optimisation of ratios.

Is Pictet also considering job cuts, similar to those currently being implemented by its competitors?

No. Our approach is different. Many CEOs in Davos pointed out that AI could help reduce workforces by up to 30%. We see it differently: we want to achieve our growth targets with the same number of highly qualified, loyal colleagues. Pictet is growing. Last year, we reached a record CHF 757 billion in assets under management. AI helps us to manage this volume without losing our personal touch.

Speaking of growth – you are building teams for Asian clients in Switzerland. Is Swissness still a selling point with Asian clients?

Absolutely. Swissness is back. Not just because we are Swiss, but because the values Switzerland represents – independence, long-term thinking, quality and respect – are in demand worldwide. Whenever I am in Tokyo or Hong Kong, I feel the trust in Switzerland as a safe haven.

Nevertheless, the financial centre is under pressure. UBS is pushing back against stricter capital rules. Does the Swiss Federal Council’s tough stance weaken Switzerland as a location?

What matters is a level playing field. We need to think carefully about what each new regulation ultimately achieves in comparison to other financial centres, and what it costs. Before introducing new rules, we should first examine whether existing ones have been implemented properly. Switzerland needs a strong UBS, no question about that. But I would even go one step further. I would welcome it if we could bring a foreign systemically important bank to Switzerland again. We need to signal that we are a good place to do business.

Which bank do you have in mind specifically?

I’m thinking, for instance, of a newer player like the fully digital and highly successful Nubank from Brazil.

Is our financial centre losing ground compared to Singapore or London?

We are currently well positioned. But we must work to ensure that it stays that way. Singapore and Hong Kong regularly send high-level delegations around the world to promote themselves as financial centres. I can’t remember the last time I saw a joint delegation from the Swiss Federal Council, FINMA and bank representatives in the US or Asia. We need to market our strengths better. This is not revolutionary, but it would send a strong signal.

The new FINMA director is calling for greater powers, such as the ability to impose fines or engage in naming and shaming. Are these tools necessary?

Other regulators already have these tools. What matters to me is implementation: will we remain pragmatic and proportional? What we, as bankers, are calling for is accountability. Accountability is central. But solutions must not be stifled by sheer bureaucracy.

Finally, what is the most important lesson from Pictet’s 200 years of history that investors should apply to their own portfolios?

The most important thing is to know your objectives. What do you want to achieve? This determines your asset allocation. Then, find the best specialist managers and pay attention to the costs. But the most important lesson of all is: build a robust strategy and stay invested. Don’t anxiously check the figures every quarter. Investing is not a sprint, it is a marathon.