At a time when the asset services sector is undergoing a great deal of upheaval, with sales, consolidation and even the closure of certain players--such as , the acquisition of and the major manoeuvres surrounding --Pictet Asset Services is banking on its atypical positioning to continue to grow. In the words of , who is responsible for business development and client relationship management at Pictet Asset Services (PAS), this growth is “niche”.
PAS is one of the four business lines of the Pictet Group--alongside Wealth Management, Asset Management and Pictet Alternative Advisors--”a business that has existed for a long time within the group and has developed in a pragmatic way over the last 30 years”. PAS is a “historical niche player”. It manages €200 billion of assets of third party managers, “i.e., a third of the group’s total amount under custody”.
That amount seems “modest” in a market where the major players in the industry are in a race for critical mass. It is “a race in which we have never wanted to participate. On the contrary, we want to be an alternative to the very large service providers for customers looking for agile solutions and excellence in service quality. We build long-term relationships with our partners,” said Pech.
“Private banking” approach
That philosophy, he said, amounts to putting the group’s “private banking” DNA at the service of a business perceived as “industrial”, based on a “one size fits all” model.
Pictet’s philosophy, which “works better and better” and which, Pech argued, allows the group to resist the instability of the sector. He attributes the instability to the fact that “asset services are wrongly seen as a commodity, i.e. an indispensable back office service, but which everyone complains about and which no one wants to pay a fair price for. So we end up with activities that, because of a lack of critical mass, no longer generate money. And logically, some groups consider that this is no longer their core business and that it’s time to get rid of it.”
PAS has chosen a “contrarian” model, a “premium” model based on the added value “offered to the client”, investment funds, but also asset managers and third party managers. “We support them so that they can focus on their business without having to worry about the rest. They may still need an auditor and a lawyer, but everything else PAS can provide. This includes, in no particular order, classic custodian bank services, fund administration, management companies for alternative investment fund managers and higher value-added services such as technological solutions to facilitate interfacing or access to a trading room. “The beauty of our offer is that it is already a one-stop-shop,” stated Pech, who insists on the fact that the offer is being developed in a “pragmatic” way as and when clients’ needs arise.
Pragmatic development
Regulatory developments have given rise to numerous requests from these clients. So has ESG. Pictet Asset Services has developed ESG filtering and product selection tools for its clients, provides numerous reports and makes relevant data available. On the regulatory side, the company has developed tools or consultation modules that enable its clients to comply, “but also to understand the regulations”.
All this comes at a price. It is price that clients are not reluctant to pay. Pech said: “Pictet’s positioning has always been one of excellence in client service, something we have been doing for a very long time in private banking, asset management and also in asset services, where there is a whole clientele that seeks excellence in client service. A service at the right price is a win-win relationship for all parties. We are all consumers in our private lives and there are brands and places where you know that everything will be fine, that there will be no problems. And Pictet is a bit like that. It is this comfort that we provide and that allows us to differentiate ourselves from our competitors, who are more based on an industrial model. I am not criticising this model, but it does not satisfy all our clients.”
While Pictet Europe will move its headquarters to Frankfurt, all of PAS’ business will continue to be run out of Luxembourg.
Luxembourg is the base from which PAS will continue to grow. PAS has 228 employees, 73 of whom are based in Luxembourg, as well as a dozen or so relationship managers in the Paris, London and Monaco branches. Pech said he plans to expand the current branch network to get closer to customers. “We want to have a close relationship with them.”
Read the original French version of this interview on the site. This article was published for the Paperjam+Delano Finance newsletter, the weekly source for financial news in Luxembourg. .