While the coronavirus pandemic has hit many industries hard, such as travel, others, like wealth management, have proven markedly more resilient.
The ongoing situation has escalated a number of areas that companies managing the wealth of high-net-worth individuals are focusing on. Most notably, as the demographics of investors continue to shift, sustainable and ESG-driven opportunities have come to the fore alongside digital enhancements, among others.
“The broader disruption has created new avenues of growth for our sector,” says Yves Robert-Charrue, head of Switzerland, Europe, Middle East & Africa, and member of the Executive Board at Swiss wealth manager Julius Baer, which recently announced a record-high $657.9-million half-year IFRS net profit – an increase of 23.4 percent. He adds that the strong emphasis on transformative digital acceleration tools has benefited both employee and client experiences.
Bahnhofstrasse 36, Zurich, has been Julius Baer’s HQ since 1925
He adds that a strong emphasis on transformative digital acceleration tools has benefited both employee and client experiences. “Besides this, there are some interesting trends that businesses such as Julius Baer are increasingly looking at.”
The rise of financial wellness
The pandemic and accompanying economic uncertainty has seen a growing emphasis on wealth preservation – particularly for the next generation. While wellness has been heavily discussed in mental and physical contexts for some time now, 2020 also saw interest in another term developing: Financial wellness.
As a generational black swan event, the coronavirus pandemic has created an unprecedented degree of uncertainty, not only on a global economic level, but also on individuals.
“Many clients have taken a long hard look at their finances with an increasing focus on leaving a legacy and preserving their wealth for the next generation,” explains Robert-Charrue. “While this is a known concern, the harsh reality of the global pandemic has further encouraged families to get their affairs in order to create long-term security for their families.”
The pandemic has seen an increasing focus on leaving a legacy, as well as the preservation of wealth for the next generation
Adding that this kind of financial wellness is now more important to clients than ever before, he says: “We believe that supporting the well-being of all the family members in this way is fundamental to what we do.” While this predominantly comes down to managing and advising clients’ wealth, engaging with, informing, educating and supporting all members of family matters too.
Responsible wealth management
It’s already been well-reported that the pandemic saw ramped up interest in sustainable investments over the course of 2020. Now, the case for building a more resilient world is clearer than ever. “The pandemic has served as a call to action for everyone – from governments to the private sector and society as whole,” says Robert-Charrue. “It is clear that the finance industry has an important role to play in enabling capital shifts towards a more equitable future and healthier planet for generations to come.”
Yves Robert-Charrue: The harsh reality of the pandemic has encouraged families to get their affairs in order
With this in mind, Julius Baer developed its responsible investment framework, which aims to empower clients, employees and wider stakeholders to make a positive and measurable impact on the world. “There is no doubt that we are seeing more and more demand for sustainable and responsible investing across our entire client base. Leading the way on this trend is our younger clientele who is more vocal in their concerns around sustainable issues such as climate change.
Julius Baer recently moved its regional office to a Platinum LEED-certified building, ICD Brookfield Place, in the Dubai International Financial Centre
“While creating this sustainable and value-driven ecosystem for our clientele, we want to continue our role of being responsible citizens.” Through this process, the wealth manager is developing “client communities” to bring together like-minded investors for debate, education, shared ambitions and action, adds Robert-Charrue.
The Swiss wealth manager has also made moves to try to manage and actively contribute to the communities it operates in, says Régis Burger, head of Middle East & Africa at Julius Baer. “Be it our recent move to a Platinum LEED-certified green building in the Dubai International Financial Centre, or collaborating with local NGOs to plant trees in Dubai for a better tomorrow, it is important to engage our employees in this journey to achieve our collective ambitions.”
Responsibility to address wealth inequality
With the coronavirus revealing uncomfortable truths about the fragility of global supply chains and the interdependence of our planet, Burger highlights the rapidly growing gap between the world’s wealthiest and poorest citizens as an area of particular concern for Julius Baer.
“It is clear that we have a responsibility to address this wealth inequality and, as such, we are very proud of our work through the Julius Baer Foundation where we focus on various initiatives to bridge this gap,” he says.
For example, the foundation has backed projects in the Middle East and Africa including the partnership with Christel House South Africa, which is a non-profit school in Cape Town focused on unlocking the potential of some of the country’s most disadvantaged young people. Though it is a long road ahead to solving South Africa’s inequality crisis, through the collaboration the foundation aims to nurture young people who can lead the needed change and work towards reducing the wealth inequality gap in the country.
Located in Cape Town, Christel House provides top-quality education to more than 700 underprivileged children ranging from grade ‘R’ to grade 12
Another of the projects, Jojoba for Namibia Trust, empowers women in desert areas to run their own jojoba plantations and establish themselves as vendors of prime jojoba seed oil to the European cosmetics industry.
“Our aim is to provide our clients with an opportunity to harness their wealth and privilege to create more avenues for more people across the world,” explains Burger. “We also want to create more awareness on the topic and drive action to shape societies that are ultimately more equal. Some of the projects of the foundation, such as those in South Africa, are an excellent example of the community outreach and how we can work together to make a difference.”
The client of tomorrow
Julius Baer has noted a substantial shift in its client base, with women and younger investors taking an increasingly larger role in the wealth manager’s discussions. “Our wealth management approach has always been inclusive in order to stay relevant to the client of the future,” says Burger. “Our focus is on the values and expectations of these emerging client groups so that we can equip our relationship managers with the necessary skill sets.”Now, he adds, “It is more important for relationship managers to focus on a client’s overall needs, focusing on a holistic approach going beyond just investment solutions.”
Expectations in the Middle East are changing too. “In the region, traditionally, clients who run first- or second-generation family businesses have sought stable cash flows and fixed income, which has typically worked very well for them over the past decade. However, with more opportunities now available, clients are shifting part of their interest towards private equity or alternative investments with a slant towards companies focused on artificial intelligence, cloud computing and even biotech.”
Régis Burger: “Clients are shifting part of their interest towards private equity or alternative investments with a slant towards companies focused on artificial intelligence, cloud computing and even biotech.”
With demand rising for alternative investment, there has also been a move towards broader experiences that will fulfil the needs of this shifting client base and align with their investment approach. “Areas such as digital banking platforms and financial education are at the forefront of our transformation journey to ensure we continue to be the wealth manager of choice for future clients,” explains Burger.
Investing in the future
Robert-Charrue says: “We strongly believe in the statement ‘How we invest today is how we live tomorrow’.” This ethos has always been important to Julius Baer in terms of shaping the future, he adds, not just for clients but also stakeholders.
“This goes beyond our research on our next-generation investment philosophy, which looks at mega trends that will impact the future. For us, it is about creating a dialogue with our clients on what this collective future will look like and how we can help translate this narrative into holistic and impactful investment solutions.”
Julius Baer’s sponsorship of Formula E naturally aligns with its future mobility focus
This philosophy is something demonstrated through Julius Baer’s Formula E sponsorship, which naturally lends itself to discussions on future mobility – something the company has analysed at length – as well as energy transition. “This is a conversation we want to have with our clients and we feel Formula E provides us with a great platform to put a spotlight on one of the next generation mega trends and how these will shape the world of tomorrow,” says Burger.
He also sees events such as the upcoming Expo 2020 Dubai as an opportunity to bring these discussions to life. “These mega events provide a glimpse of futuristic trends and we clearly see a synergy between such mega activations and our investment philosophy. Expo 2020 presents an amazing opportunity to highlight the growth opportunities in the region and showcase the UAE as a bedrock of wealth creation, especially for the Middle East and Africa.”
The digital journey
With worldwide lockdowns coming in and out of force over the past year, organisations across virtually every sector have had to rapidly fast-track – or develop entirely new – digital transformation journeys. Companies of all sizes were required to adapt quickly to market and environmental shifts, and Julius Baer is no exception.
“We have therefore embarked on a transformational journey to generate incremental value by ensuring we deliver solutions faster and in a more innovative, customer-centric and collaborative manner,” explains Robert-Charrue. It is vital, he adds, that Julius Baer and the industry it represents become more agile in order to adapt rapidly to meet an accelerating pace of change. The objective is to improve the client journey in a more targeted, incremental manner through innovation that “delights clients while also attracting the brightest talent going forward”.
The Digital Advisory Suite, which supports Julius Baer’s focus on human relationships with technology, represents a shift towards a hybrid model
The purpose of improving agility goes beyond technology, enabling the wealth manager to develop new solutions over shorter cycles while delivering an ever-improving user experience. It is something Robert-Charrue credits to Julius Baer’s increasing digitalisation investment, which he says will bring efficiencies that benefit the client life cycle over the long term.
“The plan is to invest even more into new digital touchpoints and processes that connect clients and prospects directly to Julius Baer, allowing our teams to work much more efficiently from anywhere and at any time. In 2020 alone we made huge investments in our digital and client-facing solutions to enhance features such as digital onboarding, including video ID, state-of-the-art e-signature technology and chat functionalities.”
He points to the Digital Advisory Suite (DiAS), “which supports Julius Baer’s focus on human relationships with award-winning technology”, as an example of a shift towards a hybrid model. “Our robo-assistant that combines suitability checks with investment proposals and portfolio monitoring supports our relationship managers in personalising the advisory process without losing the human interaction that is so important to our clients. This frees up even more valuable time for them to take care of our clients’ needs.”
A move to a post-pandemic world
There is no doubt that the pandemic has played an important role in accelerating these trends and that the next decade will see a remarkable shift in how companies interact with their clients. Julius Baer is well positioned to benefit from changing trends given its pure-play focus on private wealth and their strong commitment to adapting to changing client needs.
Régis Burger on: The hybrid model
The disruption caused by the coronavirus pandemic propelled us to explore and embrace new ways of virtual interaction. I don’t believe the pandemic has fundamentally altered the industry’s strategic framework; in fact, it has highlighted the resilience of the wealth management sector as a whole and supported us in effectively leading our business into the digital era.
For Julius Baer, it is imperative to continue focusing and investing in our digital transformation in order to stay relevant to not only our clients but also our employees. Though the digitalisation efforts began pre-pandemic, the role that technology plays in our industry has accelerated drastically and we definitely foresee a change in the behaviour of our clients and employees. While on one side, our industry began to rely more on digital channels, the challenges presented by the pandemic reminded us yet again that wealth management is in the end a people’s business – driven by mutual trust, shared values and true connections.
In order to respond to accelerating client needs as well as continuous challenges and evolving trends, wealth management will move towards a more hybrid model, adopting the real value of human advice complemented with the intelligence of automated systems and leaner processes.
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