Continued from Part One on May 30
Many of Pictet Asset Services’ larger rivals have spent the last years trying to replicate the systems and services that their clients offer in the hope that their customers will outsource these functions to the custodian, an effort that has been only partially successful. Briol is sceptical.
“We do not want to impose our technology solutions. We have all the custodial and fund administration functions on our platform PictetConnect but we would never cross the bridge by providing a portfolio management system, which is something that some of our competitors do. I am really not convinced about that," said the Pictet Asset Services chief executive.
“We put a lot of emphasis on interfacing with the clients’ portfolio management system, to be a true partner rather than imposing solutions through a one-size-fits-all approach.”
Briol said his firm invests a lot in the platform and the interface, taking a “best-of-breed approach” that involves some inhouse development and some vendor software.
“There are certain things that we can do internally and there are certain things that we would buy external components and integrate them. It’s really where we can add value that we would keep that internal. An example would be highly customised client reporting for big pension funds and that is something we would do internally.”
In terms of human resources, Briol said the firm now has about 250 people in Switzerland, Luxembourg, the UK and Singapore where it has been hiring selectively.
A thread running though Briol’s comments is that Pictet is focused on long-term, sustained growth rather than short-term trends, an objective it shares with its asset management clients.
He said: “Another blessing we have as an unquoted company is that we have time in front of us. There is a slide that we show when pitching, which shows the evolution of assets in the group, so that goes up and down, and the line of the staff which just keeps going north. That shows that in tough times, like we have now, we’re not firing anyone. We’re sticking to the model. We are building loyalty with the staff which in turn build loyalty with the clients, and that is part of the culture as well.”
Briol said he is present in client pitches and thinks that is important: “Managing partners get involved with clients and I think that is central to the model. If you want to properly manage an organisation, you need to feel the heat so to speak and be there not only for good discussions but also the difficult discussions. It is important for me to get feedback from the field, to hear people complimenting us or complaining about something that could be improved is central to me. That is the ultimate acid test.”
And talking of what is important to clients, Briol has a clear understanding of his firm’s role: “We are an asset servicer so we need to focus on getting the basics right. We want our clients to focus on Alpha generation and we take care of the rest. So that’s what we’re trying to do and central to that is the idea of the one-stop-shop. So that is a modular, comprehensive offering where people can pick-up custody, fund administration, transfer agency, ManCo companies, trading services. Making the lives of our clients easier is central to us.”
Most asset managers have had a mixed three years since COVID but this has not translated into client turnover for Pictet Asset Services, said Briol. “If firms are facing fee-compression, clients might renegotiate but if people are only going for the cheapest, we probably would not be the right provider so it’s probably not the right partnership. What we see generally is that people are quite loyal, particularly when they are going through tougher times with performance or people are reimbursing their money from the fund, then we will stick to our guns. We have the patience.”
The near collapse in March of Credit Suisse and its subsequent acquisition by UBS shocked the banking world, which could have long-term implications for the industry, Briol said.
“Globally, we have been through turbulent times, both in Switzerland and other parts of the world as well. That has an effect. The negative effect is that the perception is that the banking sector is unsound. That is a concern.”
Briol added: “It is never an opportunity for us to rejoice when competitors are in difficulties because we need competition based on healthy arms-length friction between actors. But the reality is that what we do puts us in a strong position when there is instability in the market. People are looking for stability so they can focus on their core business of managing portfolios. They don’t want to be distracted by: “Is my provider going to change his priorities?””
Briol is right that Pictet’s founding principles are attractive in times of uncertainty, nor are they about to change.
The chief executive added: “We have been independent for some time now, over 200 years, and we want to continue to be independent and to control our own fate. We have never embarked on a takeover, I think we’d be bad at that because it’s not in our DNA. What we do is organic growth through the selective inclusion of excellent talent.”
To be continued on June 1
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