Pictet follows best route into funds space

Rémy Best cuts a suave, sharply suited figure as he strolls into the boardroom at the Swiss bank’s new headquarters. Yet despite his conservative appearance, Mr Best and his fellow partners are slowly ringing the changes to the hugely traditional private bank, founded in 1805. Most recently, they courted controversy in Geneva’s staid private banking fraternity by moving from a predictable lakeside abode to the up and coming, former industrial area of Praille-Acacias-Vernet. The move appears to be part of a broader switch from discretionary private banking to a more factory-led funds franchise, with managed assets slowly overtaking money held in discretionary accounts. During 2008, when larger Swiss institutions suffered huge outflows, Pictet clients delivered SFr17bn (€11.5bn) of net new money, with assets under management currently estimated at €140bn, and the mutual funds franchise representing almost €50bn of this total. While remaining guardians of the “white glove” private client service ethos which made Pictet famous in Switzerland, France and beyond, Mr Best and his staff are increasingly concerned with manufacturing funds and selling them on to clients of their rivals’ banks. PWM: Is it possible to actually sell products to clients in the current crisis, or is it simply a case of trying to reassure them? Rémy Best: When the severity of the crisis began to increase, the big concern of our clients was cash management. So we said: why not have a sovereign fund denominated in Euro, Swiss Francs or US dollars? We very quickly launched such a fund, and by the end of the year, had E16bn of net inflows into our cash management range. We are selling this fund to other banks in Switzerland. As a Swiss bank, money market funds are the last product you want to buy from somebody else. You should be able to do it yourself. It is a great success for us to see our head-to-head competition choosing our funds as delivering value to their clients. We are not competing with investment banks and we complement a brand like Franklin Templeton, because we have 65 funds, not 600, and offer expertise, stability and innovation. PWM: As you are growing while others are shrinking, does it make it easy to recruit staff, especially with all the unemployed investment bankers knocking on your door? RB: Investment bankers are not necessarily the people we are looking for, although they probably have some of the attributes. It’s very difficult to find staff, but at the same time, we have never had so many candidates with such good experience. These are very high profile people, who we never used to attract so easily. These candidates are coming to us spontaneously, so we feel there is an attractiveness to the way we do our business, which is independent, long-term and putting the client, not the wallet first. We have 3,000 employees at Pictet, with staff growth exceeding 10 per cent per year. We hired 325 people in 2007 and more than 350 people in 2008. These are big numbers for our size and we will continue to hire across all divisions in 2009. PWM: Does the relocation of your headquarters to a regenerating, former industrial area signify a move away from traditional, private client wealth management to a factory-led mentality of producing and selling mutual funds? RB: This does not necessarily signify a factory style. ‘Acacias’ will be the new ‘downtown’ of Geneva and we were the first to arrive. When I look through the window, my understanding is that Pictet is more willing to move into new territory. Ten years ago, we had less than E5bn in our funds. Today we have E45bn. Pictet Funds is now in 26 countries, with ten local offices, because we believe you need to have people on the ground. One consequence has been the depth and breadth of our coverage of distributors. We tend to think we know our clients very well, through the way we are organised. Before, we were serving mainly the cross-border houses. Now, the national distributors have been added. Another dimension is retail distribution; we are serving banks which want us to teach and train their specialists, so they can advise retail clients. PWM: Which is your core market today? RB: We started in Switzerland, Italy, Germany, Spain and France. We are now expanding into the UK, Scandinavia, Greece, and the Middle East, which were not previously on our list. Europe clearly remains our most important market, but Asia is growing fast, and I hope that one day Asia will be even bigger than Europe in size for us. But today, it’s a good rabbit to follow.