Victor Aerni’s business growth approach for Pictet Wealth Management (Pictet WM) in Asia prioritises organic strategies, targeting key markets while avoiding obsessive expansion. Throughout his career at the Swiss pure play, the company has prioritised investments over cost-cutting and he plans to uphold this approach in Asia.
“We want to grow the business, but it has to make sense,” the Asia CEO told Asian Private Banker in the second of a two-part interview series. “We shouldn’t be obsessed about growth. I have been in Pictet for 14 years, we never did cost cutting as such.”
“But there are moments in time when we say next year we want to maybe grow a little bit less fast or invest a bit less. It’s more that willingness to invest internally within our firm, which is sometimes higher and lower,” he said in his first interview since taking up the new role.
Aerni acknowledged that Tee Fong Seng, the former Asia CEO of Pictet WM, did “a great job together with” Alex Ng and Sharon Chou, who oversee the North Asia and South Asia wealth businesses, respectively.
“I call it the apprenticeship model. I don’t know how much it’s practiced at other players here in Asia, but that’s something definitely I want to push.”
“In terms of market strategy, there is no change,” he emphasised, adding that they will “still want to focus on Singapore, Hong Kong, Taiwan, China, and to a certain degree Southeast Asia, such as Thailand, where we have an alliance with Bangkok Bank.”
In Asia, Pictet WM manages US$49 billion as of end-2022, according to APB estimates. About 70% of the wealth manager’s AUM is from large wealth clients and single-family offices with above CHF 50 million in assets. The remainder are HNW and UHNW clients with between CHF 5 million and CHF 50 million.
“Where there is definitely a change and it was introduced already, is my executive committee. But that’s a question of style, there is no correct or wrong,” Aerni continued.
His executive committee is currently composed of market heads and individuals from the investment side, following a similar structure to how he operated in Zurich. The governance in Asia was previously focused more on the corporate functions, such the COO and CFO, for example.
Aerni is also keen to grow his relationship manager (RM) teams, but at the same time foster a collaborative environment by combining experienced seniors with talented juniors. He considers individuals like a 40-year-old or a 35-year-old mid-season banker as young talents.
“[It is] somebody who has already worked a little bit and wants to join a player which has more of an entrepreneurial approach, where they can contribute, benefit and learn from,” he explained.
“I call it the apprenticeship model. I don’t know how much it’s practised at other players here in Asia, but that’s something definitely I want to push.” He sees other private banks’ efforts to reduce costs as an opportune time to discover new talent.
The CEO, responsible for managing around 75 RMs in the region, considers ‘personality fit’ as a vital aspect in the hiring process. Furthermore, emphasising the significance of the personality is rooted in Aerni’s belief that people are the core capital of the group, which only focuses on organic growth.
“When you have challenging markets, like interest rates rising now, it’s much better if you have less exposure. So, for us credit will never be a lead product.”
His rationale is based on the belief that creating the right organic company leads to self-sustaining growth. On the other hand, if a company is more mergers and acquisitions driven, they “care less about the team approach because their leadership style is different.”
“[At Pictet], even every partner, from managing partners to equity partners, works in the firm and that makes a very special culture. Because we are not just shareholders who are somewhere detached, but we do have a common objective. Clients first is a big theme.”
Aerni perceives the Asian wealth management landscape as being characterised by two models: The brokerage-driven approach, where an investment bank generates revenue from selling financial products. And conversely, the asset allocation approach, which Aerni considers as the very essence of their organisation.
The primary growth engine for him lies in the IPO segment, where he anticipates significant growth in China, India, Vietnam, and Thailand, consequently leading to new entrepreneurs in the region.
“And that makes room for a lot of different banking models. For example, for the investment bank who helps on the IPO side, which is not our business,” he said.
“For the client who then has money and wants to invest US$100 million in a diversified meaningful way, and needs a fine private bank to do that. That’s the role we want to play in Asia. Our segment is definitely focusing on larger clients. We don’t want to go too low.”
Equities over credit
Pictet WM boasts the highest discretionary portfolio management penetration rate in Asia at 20%, according to data from APB. It has a broad range of investment offerings, including alternatives, where they refrain from distributing third-party funds and avoid receiving retrocessions from managers.
The Pictet Investment Office, catering to ultra-high net worth individuals with mandates starting at CHF 100 million, has a strong equity bias. Aerni admitted that the firm has made a conscious decision to never excel on the credit side “because we want to sleep quietly.”
“If a client wishes to have credit, we will do it but it’s not something we push. That’s a big difference in Asia because I see many other players extremely aggressive on the credit side.
“But when you have challenging markets, like interest rates rising now, it’s much better if you have less exposure. So, for us credit will never be a lead product,” he concluded.