Clients' wealth in safe hands
Philip Jehle, head of private clients unit, Lombard Odier Darier Hentsch (Asia), says the firm operates with different dynamics from publicly-listed private banks. This includes independence from shareholder pressure, and the capacity to align investment initiatives between clients and partners.
"Not being quoted on any stock market does have its advantages because we can offer independent advice and avoid any conflict of interest. With a clear operating vision, our values and approach to investment and wealth management strategies remain constant with the needs of our clients and the market environment rather than external pressures," says Jehle, who has more than 20 years' experience in the Hong Kong private banking sector. "We do not have to face commercial risks since we do not carry any debt on our books. For example, all resources are dedicated to our private banking and asset management processes, preventing conflicts of interest with our clients."
He says for most investors and financial professionals, the financial crisis had been a time of turmoil, but for Lombard Odier, the past 18 months has been a "golden spot".
"Every 10 years or so, an event similar to the most recent financial crisis comes along and rocks the markets. It is at times like these the investment strategy and financial research structure used by boutique banks, such as Lombard Odier, really pays off," he says.
"By adhering to the trusted principles of our business model, clients avoided the worst of the impact and losses brought about by the financial crisis, and over-leveraging to gain access to complex investment structures. As a relationship manager, knowing you have done the best possible job for your clients produces an `island of contentment feeling'," Jehle says.
He says the firm tries to discourage clients from leveraging, which prevents them from exposure to hazardous investment strategies such as the subprime mortgage crisis.
"Lombard Odier only takes risk when risk-taking is well-rewarded. This is at times when the margin of safety is large and the probability of losing money is low," Jehle explains.
Because of the financial crisis, the firm was able to recruit experienced relationship managers who could identify with the company's business model.
"Now the market has rebounded and financial organisations are hiring on a large scale, recruiting suitable relationship managers has become more of a challenge. We are seeing a return to a situation where unrealistic packages are being offered," says Jehle, who prefers to hire relationship managers with at least 10 years' experience.
When recruiting, Jehle says the firm looks for people with investment knowledge and a passion for the industry. "Being a relationship manager is more than simply investing clients' assets. Private bankers must be committed to building long-term relationships through providing tailor-made solutions of the highest quality, competence and ethical standards to each of their clients," Jehle says.
He says with more than US$123 billion in assets under management, a key feature of its investment strategies is a business model that often includes partners investing in the same investment tools as the firm's clients. He says the variety of their clients' investment needs means the bank offers a range of products. These include specialist or multi-asset strategies, core and niche products, benchmarked and absolute return strategies, and investment options with or without capital preservation.
With Lombard Odier's relationship with Hong Kong dating back to the 1950s, when the firm's partners initiated their first exploration into the region's economic and financial potential, it's now seeing wealth generation being passed on to the second and third generation.
"The younger generation might be a little more sophisticated and better informed than their parents, but the principles of providing private banking services remain the same as they have always done. Our main job is to preserve wealth by identifying the factors that drive market returns," Jehle says.