François Pictet: “We're not in the business of chasing AUM”
For someone who bears the name Pictet, it may come as a surprise that François Pictet has spent much of his career outside of the Swiss pure-play private bank.
But the executive, a ninth generation member of the Pictet family, considers his stints as an analyst at Credit Suisse and working in private equity, as a valuable right of passage ahead of joining the Pictet group in 2015, and being appointed one of its eight managing partners in 2021, with oversight of the Asia business.
“I have seen how it is to work at a much larger organisation, and the things I probably didn’t like so much,” François Pictet told Asian Private Banker in an interview, which took place in February before the industry was stunned by the shock CHF3 billion(US$3.24 billion) rescue of Credit Suisse by rival UBS.
“It’s good to have people who’ve been working out there in different firms. It’s very useful because sometimes people who have been working their entire career at Pictet don’t realise how different it can be in our industry,” he said.
Such experience is likely now essential for François Pictet, as the private bank increases its focus on alternative assets including private equity, as well as doubles down on its value proposition in Asia, which has a strong focus on Hong Kong, Singapore and Taiwan.
Focused on wealth management
There is no question that Asia remains a key growth engine for Pictet, with the group managing about US$60 billion in AUM in the region, according to calculations by APB Insights.
François Pictet also has a clear view on how the bank, whose clientele are mostly UHNWIs and family offices, should differentiate itself from its patchwork of competitors– ranging from universal, to retail-linked, to fellow pure-play banks – in Asia Pacific:
“We need to be ourselves and that’s going to be more than sufficient to differentiate us from the rest,” he explained. “Our strength is to be focused on wealth and asset management for private individuals and institutions – that’s all we do. We don’t do investment banking, so we don’t have potential conflicts of interest. We don’t do corporate nor retail banking.”
“All our attention is on how to best manage the assets of our clients, without thinking about how the investment bank could put a certain product in the portfolio, or having a certain conversation about their corporate banking needs. All of that sort of pollutes the relationship or is a distraction to the ultimate goal, which is providing the best advice in terms of wealth management,” he continued.
There are other areas in which the bank does not want to compete. For example, Pictet is known across the industry for not matching the often aggressive degrees of leverage doled out by universal banks. “We’re more conservative and we want to remain on the same side of the table as our clients, so our interests are aligned,” he said.
This has served the bank well in Asia recently, he believes, given the waves of margin calls that have rippled through the region’s private banking industry, such as in Chinese high yield bonds. “[It] is the worst possible solution for your clients, because you’re probably selling at the lowest point and at the worst possible time for them, and destroying a lot of possible value for them in the long-run”, he added.
Trust and resilience
Rather, the bank prefers to focus on offering wholistic, wealth-focused solutions that address its clients’ long-term requirements, in terms of returns, capital preservation and wealth planning.
“It is all about the long-term and providing trust and resilience, and taking away the worry that money can be for these people, so they can focus on what they do best,” François Pictet explained. “Like being an entrepreneur, or retiring, or spending time with their family.”
That philosophy helps explain the bank’s strong rate of discretionary portfolio management penetration in Asia Pacific, relative to others in the industry, in addition toits high proportion of recurring revenue. Both those factors contributed to a resilient performance in 2022 and helped the bank secure Asian Private Banker’s Best Private Bank – Pure Play at the Awards for Distinction 2022.
Full breadth of private assets
That is not to say that the bank does not have a sharp focus on products, François Pictet pointed out. Pictet has honed in on building out its alternatives offering, which runs the gamut from private equity and private debt to real estate. “Clients in Asia are very keen on private assets, and this year will be the year when we really go with the full breadth of private assets,” he said.
Among the newest developments for the bank in this space are direct investments – as opposed to going through funds – in private equity, private debt and venture capital in Europe and the US, an area where he believes regional investors are underexposed. “We are becoming the GP, if you like, on top of continuing to offer the best GPs that we find,” François Pictet explained. “We want to capture more of the value chain, we want to be at the source of investment decisions.”
Fresh pair of eyes
In Asia, Pictet is also going through a significant changing of the guard. The bank announced in September that Tee Fong Seng would step down as CEO of Pictet Wealth Management Asia, after running the business since 2019. He will be replaced by Victor Aerni, who is currently head of the Pictet Wealth Management business serving the German-speaking Swiss market.
For François Pictet, however, the change is likely to have little impact on how Pictet approaches the Asia Pacific wealth market.
“With Victor we have someone who knows the group in Switzerland very well and is going to be very useful in terms of connecting the headquarters with Asia,” he said, noting that North Asia CEO Alex Ng and South Asia CEO Sharon Chou will continue to provide the “local touch”. Tee will remain on the board of Pictet’s holding company in Singapore.
“It’s going to be a fresh pair of eyes that’s going to look at our commercial efforts in Asia, and we’re still going to be able to use Fong Seng’s knowledge and experience in this market. It should be very smooth in terms of the transition,” said François Pictet.
Original interview published in Asian Private Banker, Tuesday 4 April 2023.