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Q. Given your broad insight into the intermediary market, can you tell us how firms have fared in 2020, given that it has been an extremely challenging year?

A. 2020 has been a very testing year and a bit of a rollercoaster. What is interesting is that the flow of new clients and new assets to intermediaries has not stopped. They have been very fortunate in attracting good new business. That is true of all our markets – Switzerland, Europe, Asia, the Middle East and Latin America. At the beginning of the year, when the crisis started, intermediaries with leveraged clients in Asia and the Middle East, were hit hard. But these were crazy days. As we speak, asset prices have recovered to their previous highs. Looking forward to next year, however, intermediaries in Europe with clients in regions such as Latin America or Asia may struggle to generate new business for as long as travel bans remain in place.

Q. Are there any lessons that intermediaries should learn from 2020?

A. Yes, there are two clear lessons. Firstly, as is always true in a crisis, the closer you were to your clients in the volatile months of March and April the deeper your relationships will be in the years to come. By contrast, your clients will not forget if you’ve been detached and failed to reach out to them when markets have dropped 20% or more. Secondly, technology that supports personal relationships is key in this game. You must be in a position to interact with your clients in a technologically advanced way. Similarly, you need to have good technology links with your custodian so that you can trade instantly and have fast straight-through processing rates. There is great potential if technology is used effectively. For instance, an intermediary in Dubai could set up a WebEx session with a client in South Africa to talk through his portfolio. You could dial in even a portfolio manager from Zurich who would never have previously talked to the client directly if he had to fly.

Q. Strategically, are there any issues that intermediaries need to think about as we approach 2021?

A. Our ‘Business Navigator’ concept is based on the fact that we want to look at our intermediaries and their clients in the most holistic way. If you look at the macro trends, central banks have been flooding the market with cash, and governments have been injecting fiscal stimulus like there is no tomorrow. So people who think ahead are starting to ask themselves who’s going to pay. Sooner or later taxes will have to rise and some governments are already talking about this. When your clients come to you and ask “how do I protect my wealth,” what are you going to do? Do you have this expertise across all the jurisdictions where your clients are operating? Or do you need to partner with an expert like Julius Baer?

Q. What has Julius Baer’s intermediary business learned in 2020?

A. The lessons we have learned are similar to those for intermediaries. We need to be close to our intermediary clients and understand their needs. This is absolutely key in a relationship business. Technology plays an important role. We need to enable our clients to service their clients quickly, whether they are opening an account, sending a waiver and getting it signed, transacting, or instantly structuring a certificate with real-time tools. Finally, we must have subject matter experts who can empower our clients’ success.

Q. Looking forward to 2021, what do you think the operating environment will be like?

A. I cannot predict when Covid-19 will end, but my instinct is that 2021 will not be a year when everyone makes big profits. US dollar interest rates are now zero and European countries already have zero or even negative rates. Although low rates do not affect intermediaries’ profitability directly as they do a bank’s, 2021 is going to be a year when ‘you need to wear warm clothes’ as they say in German-speaking regions. Looking longer term, I think the intermediary business will continue to grow as wealth is growing and relationship managers will leave banks and go independent, but there will also continue to be margin pressure. The wealth management community had a good year in 2020, but it is dangerous to assume that means you do not need to change anything. You need to be sure your strategy is sound. What is your edge? Where is your value proposition? If you know what changes you need to make, execute them now.

Key takeaways

  • 2020 was a testing year but broadly speaking intermediaries attracted new business.
  • There were two clear lessons – keep your clients close and master volatility through new technology.
  • 2021 may be a difficult year; it’s a time to execute a clear strategy.

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