Instead of just ‘legislating, regulating and compelling’, should the authorities not also give banks and their clients incentives to go in for sustainable investment? That is Guy de Picciotto’s response when asked why only 10 to 15 percent of wealth management clients wish sustainability criteria to be taken into account in the management of their assets. The chief executive of Union Bancaire Privée (UBP, with 2000 employees, 140 billion Swiss francs under management, and a 224 million franc net profit in 2023) also talks about transparency on performance in wealth management and explains why he has no intention of retiring any time soon.
We live in the era of technology and transparency. There are a number of platforms that compare wealth management performance in Switzerland. What are your thoughts?
Comparing performance is absolutely a good thing. But there’s a risk of leveling the playing field: this transparency doesn’t encourage people to take risks and choose not to follow the crowd. Performance is the result of asset allocation and product choice. If we stick to the risk profile, adapt the allocation and select appropriate products, performance is relatively predictable. Nevertheless, it can make clients dissatisfied; you can have a bad year, but you should always compare performances over a period of three to five years. In my opinion, we have to sell expertise rather than performance, because there are so many variables outside our control.
One of the comparison platforms, Performance Watcher, argues that a better return can be achieved by investing in two stock ETFs and two bond ETFs.
It all depends on the weighting of each ETF. Once again, asset allocation is the key. With an infinite choice of products, the goal is to beat the index, at least in certain segments. Over a ten-year period, in most of those years you can beat the indices, although it may be harder to do so in the United States.
Where does a Geneva-based wealth management bank achieve growth today? In Dubai, Asia, Zurich?
First of all, I don't like to pit Geneva and Zurich against each other; Switzerland is a single financial centre, with an international reach and shifting geographical focuses over time. Wealth management in Switzerland certainly does achieve growth in the Middle East and Asia, but also in Eastern Europe, outside Russia. The European Union is lagging behind a little, as is Latin America. Zurich offers access to the same types of clients as Geneva, possibly with more exposure to European and Middle-Eastern clients, not to mention domestic customers.
How do you see jobs in Swiss wealth management evolving? Do we need more employees working with clients, i.e. outside Switzerland?
A strong banker–client relationship is essential; this can be achieved by gaining a foothold abroad. To build a relationship with clients in Asia, you need to be in Singapore and Hong Kong. For European customers, Luxembourg is definitely a good place to be. In the Middle East, you need to at least be in Dubai. But we need to keep the heart of the business in Switzerland, which is a mark of quality.
Does this mean that, in a few years’ time, most Swiss bank staff will be based abroad?
No, but over a five- to ten-year period, growth will certainly be stronger abroad than in Switzerland. There are probably also more banker recruitment opportunities abroad than in Switzerland. Laws on cross-border activities are also driving sharper growth abroad.
Have you hired any Credit Suisse employees?
Some, but certainly fewer than other banks. Of the 150 net new hires we made last year, at least half were wealth managers, with around half of them coming from Credit Suisse.
What do you think of sustainable investments?
This is now part of the regulatory framework. Regulators have imposed a set of rules in Switzerland, the UK and Europe. So whether we want to save the planet or not, this is an essential part of the process. Banks now have to integrate sustainability into their management processes and keep their clients informed.
Is the role of a bank to push clients towards green investments, or simply to show them what’s out there?
At this stage, our role is to let them know what’s out there. When we ask clients if they’d like us to manage their assets with a focus on sustainability, around 10 to 15% are keyed into this issue. So before we impose anything, the level of understanding of these matters needs to be significantly improved. Interestingly, many of these clients are committed to sustainability in their everyday lives, but this isn’t necessarily part of their asset management.
How do you explain the 10–15% figure?
With a simple analogy, for what it’s worth: everyone knows that air travel has a significant carbon footprint. But everyone still flies at a relatively low cost. It’s quite human: we know what the right thing to do is, but see it as applying to others. That’s why customer education and awareness is so important.
One way to encourage green investing might be to increase bonuses for advisors who convince more clients to take up these products. This kind of system generally works well in finance. What do you think?
I’m totally against it. Regulators can penalise polluters, but penalising managers who aren’t green enough goes against the banker’s fiduciary mandate. It could even be dangerous, as it could encourage greenwashing.
So how do we get sustainable investment moving?
We’re currently trying to achieve this through the banks, and by creating investment obligations or restrictions. Governments could also provide incentives. To make the planet greener, can we really only legislate, regulate and restrict? Don’t we also want to encourage banks and customers to make sustainable investments? Today, there are no such initiatives.
After 26 years at the head of UBP, you’ll be turning 65 next year. Do you have a succession plan for the bank? Have you set yourself a deadline or a goal?
I don’t feel ready to retire. As long as I have a valuable role to play at the bank, I’d like to stay. My father instilled in me the idea that once you’ve achieved one goal, you’re already looking to the next.
Did you know as a child that you’d one day join the family bank, and maybe even run it?
My dream was always to go and do tech in Silicon Valley, but one day someone pointed out to me that there was a bank there and that there was no point in going to California. Did I know I’d end up running the bank? No. Was it one of my aspirations? Yes, absolutely.
Your father was considered extremely brilliant, a genius. Was he a hard act to follow? Was it an added layer of pressure?
Today is the anniversary of his death [Editor’s note: the interview was conducted on 13 March]. I often told him that I wasn’t going to replace him, that I couldn’t do what he did. The added pressure came from the fact that we had to do things differently.
What mark have you left? Is there anything you didn’t want to take over or continue?
My father was a genius, without a doubt. You could see it in his knowledge and anticipation of the markets, his interactions with clients, or in trading. It was another style. But the bank is different today, with a foothold in over 20 countries and with more than 2,000 employees; this requires more business management.
Do you know who’ll be taking up the reins at the bank?
I have a nephew who’s a market manager and my son, who started in London in October. They’re 38 and 32, and joined the Bank after gaining experience in other areas. My nephew was an oncologist, and my son set up a banking start-up, after a time at McKinsey. They’ll learn things as they go. It’s up to them to figure out what they need, and how they fit in with the company and its ambitions. We’re not going to give them a rule book and tell them to follow it, that would be reductive.
Would it be possible for someone outside your family to take over at the bank?
Only temporarily. As a family-run business, a private bank without a family member at the helm would run a reputational and financial risk. It’s easy to imagine the kinds of conflict that could arise over the level of risk-taking, for example. If something were to go wrong, a CEO from outside the family could simply resign, and let the family sort it out. So, if they agree, I’d much rather keep the family in charge of the bank’s operations, than bring in someone new from the outside.