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Pictet's Tee draws inspiration from Dr M; runs the long game in private banking

Chan Chao Peh
Chan Chao Peh2/14/2020 07:00 AM GMT+08  • 8 min read
Pictet's Tee draws inspiration from Dr M; runs the long game in private banking
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SINGAPORE (Feb 14): At 65 years of age, most professional bankers would have happily retired. Not so for Tee Fong Seng.

Most recently, Tee was Asia chairman of EFG Bank’s advisory board. This was seen by most as a non-executive role and a stepping stone to full retirement.

However, Tee went on to take up a full-time executive role a year later. This time, he was appointed Asia CEO of Pictet Wealth Management, another leading Swiss private bank.

“I still have that energy to run and I want to work as long as I can,” says Tee in an interview with The Edge Singapore.

For the greater part of his career in the financial services industry, Tee was with private banks. He was with UBS for the first 15 years of his banking career, followed by Credit Suisse in the next 10.

By then, Tee had already figured out he was ready to take half a step back from the rigours of the industry. Apart from his non-executive role at EFG, he also took on external appoint-ments with academic institutions so he could impart his decades of industry experience.

According to Tee, the brand, the value and potential to further grow Pictet’s business in Asia is too strong to ignore. Furthermore, Pictet’s ownership structure – a privately-held partnership – differs from the publicly-listed companies he is all too familiar with.

Pictet, with its headquarters in Geneva, was founded in 1805. The bank is privately held by seven partners, who collectively manage the bank but also are subjected to certain long-held rules on when each partner is to retire and how new ones are admitted into this top echelon.

Tee says the ownership structure of Pictet has permeated into the way the business is driven, which differs from some of its competitors.

“We can grow at our own pace, de-pending on the market. I don’t want to go into the merits and demerits of listed companies, but I think all listed companies have a different pressure compared to a non-listed company,” he says.

At the practical level, Pictet’s client advisors, or relationship managers, are not compelled to generate ever higher fees for the bank by selling clients ever more services, hand over more assets to be managed, or, switch from one product to the new flavour of the month in an endless churn. Once a client advisor brought in a certain amount of assets under management (AUM), there is no pressure of increasing the AUM year on year. “If the market is not good, we can do less, if the market is good, let’s do a bit more. So, good times, you get more pay, bad times, you get a bit less. Some banks cannot afford that,” he says.

As an example, a senior vice president might have booked between $300 million and $400 million – a very significant AUM size by any measure. At that point, the client advisor might be inspired to try and grow his or her “book” to the next level, and thereby, earning further promotions within the bank. Or, the client advisor might feel that the current size of the book is where he or she is comfortable with, and be content just managing that AUM. If that’s the case, Pictet will look for “new blood” to generate new growth. “Today, you will find the pressure very different in some other banks,” says Tee.

With the omnipresent pressure to grow AUM, there’s the inevitable temptation on the part of people and organisations to push the boundaries. Tee recalls a conversation he had with a friend who was with a regulator in the financial industry, who lamented that if every banker did the right thing, there would not be a need for measures such as voice logging, detailed know-your-client processes, and a whole slew of competency standards banker have to meet, and code of conduct they have to adhere to.

“Unfortunately, in that eagerness to do business, there are some outliers. We just want to make sure some of the regulatory imposition looks like it is necessary, and make sure clients understand what they are getting to,” says Tee, adding that his advice for bankers is this: “Whatever you do now, it can come back and haunt you after 10 years so it’s important to do the right thing for the clients.”

One has to take a long-term view in wealth management, says Tee, “although shareholders of a listed company may disagree, given they have different demands and expectations and a different time frame,” he adds.

New generation of clients

Increasingly, Tee finds himself interacting with the next generation members of his clients. It isn’t just about getting friendly with a new generation of clients as they inherit money. It is also about building ties with the clients’ families for the long term. Many of these business families are turning to professionals like Pictet for help, to put in place proper structures and procedures, so that potential disputes can be addressed.

Tee acknowledges that most other wealth managers are actively engaging their clients’ next generations as well. “That’s the right way to go for the whole industry; we want to build long term relationships, getting ties firmed up,” he explains.

However, with a smaller base of existing clients to start with, Pictet will have a smaller corresponding pool of next generation clients to cultivate. The bank needs to try and win more new clients from new, or existing markets.

Within Asia Pacific, Pictet is eyeing growth markets such as Hong Kong, Singapore, Indonesia, as well as Taiwan and China, and will look at other markets as and when opportunities arise. However, Tee is quick to point out that these are the obvious markets where every other private bank is also eyeing. He qualifies that Pictet, because of its small size, can’t be just charging into new markets or existing ones in a big way just because the addressable market seems big.

The decisions are guided very much by the availability of talent. “So, we are not going on a hiring spree to bring in another 100 bankers. What we want to do is to be selective, grow the market steadily, strategically, and if we get the right talent, we will put in a bit more effort into the market, so, we also understand the landscape today,” Tee explains.

The measured hiring today, particularly in the Singapore wealth management industry context, is a stark contrast to the situation just over a decade ago. Back then, the industry was starting to take off in a big way. Tee, who was running southeast Asia for market leader UBS, claimed that a UBS name card can be exchanged for an offer letter with other private banks.

Private banks hire bankers from one another so that they can bring their clients long to the new firms. The wealth management industry can’t shake off the tried-and-tested modus operandi of “buying books” – poaching client advisors on the understanding that they will bring along the clients’ AUM to the new bank.

While this is a short cut to grow AUM, the banks poaching from their rivals remain under persistent cost pressures. Typically, they have to pay for the garden leave of the client advisors they’ve poached, and furthermore, these new hires can’t work, and so they won’t be ‘productive’ for months. In the meantime, the wage bill continues to chalk up.

Ten years on, a steady pipeline of specially trained new blood for the industry has been built. The competition for the right people at the junior level is no longer so intense. “I would say, the number of talents increased but somehow, I think there is still quite a fair bit of movement, more on the senior level,” Tee observes.

Inspired by Dr M

Compared to its bigger rivals, Pictet’s AUM is relatively small. As at end 2019, the amount stood at CHF576 billion ($800 billion), an increase of 16% compared to 2018. Yet, the lower base implies that there’s a lot more growth potential for the bank, especially in Asia.

“Whether you are talking about per¬centage or absolute terms, yes of course, be¬cause of the low base, there are always opportunities,” says Tee.

Now, having re-emerged from semi-retirement, Tee is getting his hands full again, trying to manage this business at a time when low hanging fruits have been taken plucked. “I would not say it is across the industry that everybody can grow, because of regulations, and because customers’ profiles have changed, their demands have changed, and customers have gotten more sophisticated,” says Tee.

But just into his latest job, Tee says he is already on a lookout for a successor, so that the potential candidate can continue with what Pictet is trying to do in Asia. In the meantime, he is thriving, enjoying, being in touch with the ebb and flow of the market. “Mahathir is my inspiration,” he quips.

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