Wealth Manager - the site for professional investment managers

Register free for our breaking news email alerts with analysis and cutting edge commentary from our award winning team. Registration only takes a minute.

Profile: How Julius Baer plans to win UK wealth

3 Comments
Profile: How Julius Baer plans to win UK wealth

Swiss private banks have long since held a reputation for being conservative and traditional institutions, quietly going about their business.

But Julius Baer International is looking to turn that model on its head, embarking on a hiring spree to fuel its ambitious UK expansion plans.

The company, which previously only had its London HQ on these shores, has opened offices in Manchester, Leeds and Edinburgh in what was its first foray into the regions.

The private bank has also established small teams in Belfast and Newcastle, as well as moving into new larger premises in Dublin, underpinning its long-term commitment to Ireland.

Julius Baer International chief executive David Durlacher admits that some have questioned the strategy in light of the Brexit vote, but he counters this, stressing that the regional push is an important plank of the firm’s long-term growth strategy.

‘People often ask about Brexit, but if you look at the UK market long-term, it has been a hotbed of entrepreneurialism over the decades,’ he says.

‘On the one side, we’ve been going 127 years and are a traditional wealth manager, but on the other, we look at disruptive technology and we are counter-cultural, whether through our investments or reinforcing in the UK.’

Durlacher is able to reel off an impressive array of statistics regarding the regional economies around the UK.

 He notes there are 24 enterprise zones around the country, with successive governments having invested in the Northern Powerhouse in a bid to spread growth around and reduce the overall economy’s reliance on London and the South East.

He also points to the quality of universities in the North and in Scotland, as well as the strength of overseas investment into the UK, despite Brexit fears.

‘The North West is largely export-based, but there is manufacturing – we saw graphene developed in Manchester – and that is coming through in the statistics that we look at.

'The number of millionaires in the North West is growing by 10% year-on-year, the fastest rate in the country. It is an economy that will go through short-term volatility [around Brexit], but it has the DNA to support entrepreneurialism,’ he says.

‘The North West accounts for 20% of manufacturing and 45% of the UK’s pharmaceutical exports, and in isolation it is an economy the size of Belgium.’

Describing Scotland as ‘a very attractive market for entrepreneurs’, he highlights that the weaker pound has helped Scottish exports to grow by 20%, adding: ‘Entrepreneurialism is rife in Scotland.

‘In Belfast, we are seeing reports of assets being repatriated post the Good Friday Agreement and wealth creation is at unprecedented levels.’

Durlacher says the key question is obviously how the company taps into these local opportunities, with the answer always the same: getting the right people in place, rather than relying on just ‘having a brass plaque on your door’.

‘You need to understand the local economy and find the right people to represent Julius Baer, and you need to commit to it long-term,’ he says.

Durlacher is very conscious of the reputational damage it can cause if a company enters a new market, only to withdraw a couple of years later when it has not been able to attract the clients it had hoped to or raised the assets under management (AUM) required to reach profitability.

He believes that Julius Baer International has already underlined its long-term commitment to offices, after it maintained and went on to grow its Dublin branch when many of its rivals opted to retrench from Ireland at the height of the financial crisis.

‘In 2008-09 we maintained our presence in Dublin when everyone else pulled out after the economy suffered a severe correction. Why? Because we knew it would recover, and it has gone on to become a poster child of the European economic recovery,’ he says.

‘Ireland has a very educated workforce, it has leading universities and it’s a very good place to recruit. We opened new premises in Dublin last year which demonstrates our commitment to grow there. It’s nothing to do with Brexit, now Ireland is booming. It does require you to have deep pockets and a strong balance sheet though.’

In keeping with this long-term approach, Durlacher says the private bank has not set short-term AUM targets for the regional offices, describing that as just one metric, alongside profitability and reputation through committing to the investments.

Further regional expansion will likely be on the cards down the line, with Glasgow remaining a target. South of the border, the Midlands and the South West are obvious holes in the new regional push’s national coverage.

‘We will look at opportunities over the next few years. We want to be sensible in how we invest in the business and make sure it makes a real impact. There are other wealth centres such as Bristol and Birmingham. It’s all people driven and we need to be seen to be hiring the best people in the regions.

‘We know that our reputation is the people who are facing our client base, and our reputation is arguably more important than the strength of our balance sheet.’

Durlacher believes that one of the key reasons the company has been able to attract so many senior bankers from the likes of Barclays, SG Hambros and Royal Bank of Scotland for its regional drive, is the simplicity of Julius Baer’s banking model, while still maintaining a global reach.

Similarly it was what appealed to him, when he moved over to the firm, following its acquisition of Merrill Lynch’s non-US international wealth management business back in 2012.

He had been at Merrill Lynch since 1999, working his way up through the ranks from its graduate recruitment scheme to head of UK & Ireland sales at the time of the deal, before being promoted to head of relationships at the combined group and then CEO in 2016.

‘The hardest part of any acquisition is not the price or the contract details, it’s down to the integration and cultural fit. People at Merrill Lynch saw it as an upgrade and they liked the fact that Julius

Baer is far simpler in its structure. It was easier for the staff and clients, who saw it as an upgrade,’ he says.

‘We have recruited from a number of different firms and people have a desire to work in a place that is far more focused – they like the simplicity of the business model. It enables people who join us from a more complex institution to work at a firm that, at its heart, is a wealth manager and private bank. So 100% of our tech spend and R&D is on private clients.’

The firm’s tech spend has been ‘huge’ in recent times. In the background, away from the more headline-grabbing regional expansion, the private bank has been readying itself for Mifid II coming into force in January.

Durlacher admits that the industry has found it ‘difficult to get right’, but he used that opportunity to upgrade the company’s client systems in order to enhance their experience online and mobile. At the same time, he saw the chance to underline the firm’s commitment to investment advisory, a service that many of its rivals have stopped offering.

‘We have very strong systems for providing investment advice. We are seeing a decline in firms offering full service investment advice alongside investment management, but we think the two go together and are very important,’ he says.

‘The technology allows us to model the potential impact of a trade on a portfolio and advise the client over the phone. It’s difficult to build, because you need to understand it’s not just equities, you need to look through the structures, for example funds and structured products.

‘We’ve invested a lot in mobile technology, not to try and rival a robo – far from it – but to empower the client. Technology should be a tool, it shouldn’t replace people. It always comes back to people and my aim is to have the best in the industry.’

Leave a comment!

Please sign in or register to comment. It is free to register and only takes a minute or two.
Citywire TV
Play Boutique tapes: my business will never be sold

Boutique tapes: my business will never be sold

In the final part of our four part series we discuss consolidation and whether it's getting tougher for boutiques to survive.

Play Boutique tapes: are top managers better off at small firms?

Boutique tapes: are top managers better off at small firms?

In episode three of our series, boutique bosses discuss whether the best fund managers are more likely to thrive at smaller firms.

Play Boutique tapes: if you want a Ferrari, you have to pay for it

Boutique tapes: if you want a Ferrari, you have to pay for it

In the second part of our four-part series, boutique bosses are asked how they can justify the fees charged by active managers.

Read More
Your Business: Cover Star Club

Profile: how this boutique beat the big guns of wealth

Profile: how this boutique beat the big guns of wealth

This small west country offshoot of a local IFA scooped a 2018 Citywire award from beneath the noses of the national challengers

Wealth Manager on Twitter