An edge in a multi-challenge world
How Vontobel’s multi-boutique approach serves a multi-challenge world
The word unprecedented has been used a lot in recent years. From the pandemic to political bloc-building reminiscent of Cold War era politics, we’re currently facing a unique geopolitical and macroeconomic climate. Vontobel CEO Zeno Staub recently provided an update on the investment firm’s strategy. In this interview, we ask Zeno how Vontobel’s unique multi-boutique setup gives the firm an edge in this challenging time.
Q: You simultaneously confirm Vontobel’s long-term strategy while flagging that many long-term economic and market trends are expected to change. Given the current geopolitical and macro-economic climate, how can you be so certain about the firm’s direction?
A: We are looking at the most difficult market situation in years. The market has been hit, at the same time, on both the equity and the fixed income side. I think we have to assume that some of the long running trends are about to change, or at least face a strong chance of changing. Inflation, interest rates and the threat of a looming recession being the obvious economic topics weighing on everyone’s mind. And this is happening amid multiple geopolitical tensions, including the war in Ukraine, which has not only a tragic human cost but also, as we are experiencing first-hand in Europe right now, exacerbates supply chain issues for resources from agriculture to energy.
When it comes to our strategy, of course we must factor in both these long-term changes, while also dealing effectively with the current environment. Yet the point of a good strategy is to be as robust and as resilient as possible across the long-term, including being able to absorb the impact of difficult environments in the short term. And that strategic approach is how we run our firm – with an agility that allows us to navigate challenging environments over the long term. That’s one of the benefits we’re reaping today after committing to pure investment management. Investing is the new form of saving, and the current environment proves our approach is effective.
As outlined during our Investor Day presentation, we’ve enhanced this ability by further narrowing our focus – by sharpening the clarity of our business model and the related cost containment measures – in preparedness for what may come. What does not change, however, is our strong conviction that our lighthouse approach – which is our strategic path to reaching our 2030 goals – is the right one.
Q: You just mentioned the need to focus and prioritize while delivering upon Vontobel’s 2030 Lighthouse Vision. How does the need for streamlining work in a firm that prides itself on being multifaceted due to its multi-boutique structure?
A: Our Lighthouse Vision is that, by 2030, Vontobel will be known as one of the leading and most trusted global investment firms. At Investor Day we presented the areas of focus for 2023-2024, representing the next steps on our path to 2030. For this reason, I won’t get into the details of those focus areas here, but I want to highlight two things. First, challenging times like these demand new solutions and new approaches – and this is where original thinking is needed. The very structure of our firm – the multi-boutique approach – facilitates a range of views and opinions, some of which are at times at odds with one another and can lead to debate which sparks change and innovation.
Second, everything that has happened over the last three years has confirmed our conviction that a client- and investment-led approach to positioning Vontobel as a pure buy-side, globally respected investment firm is the right way forward. The past years have also shown that, despite the challenging environment, Vontobel remains very strongly focused on clients and client relationships.
Our model can be seen as collaborative, with clients being served by six boutiques that capture the depth of our investing capabilities, without any dilution or barriers of access to entry. Structured Solutions & Treasury (SST) is also at the center of our firm – it’s a center of excellence which, like our boutiques, caters for all client units, supporting Asset Management, Wealth Management and Digital Investing. Not all the client units, and not all the segments in all the client units, will have the same appetite for the different capabilities and products offered by the six boutiques and SST. But they have access to them. And that is one of our key differentiators as an investment firm.
Q: We’ve talked so far about the changing world. What about the changing demands and expectations of clients? How does Vontobel’s structure position the firm for the future?
A: This is being addressed at multiple levels across Vontobel. Firstly, we exist to empower our clients to reach their investment goals so they can build their own version of a better future. What is a better future? Well, that’s up to each and every client. And one of the most valuable elements of our business model is that our multi-boutique approach enables clients to work with us and explore multiple points of view and multiple approaches toward investing.
Currently, our clients are clearly concerned about what the future holds. This is a geopolitical and macroeconomic environment where we'll have to answer new questions from our clients, including on how to protect their wealth and how to grow their wealth in an environment of positive inflation and positive nominal rates. We also increasingly discuss our clients’ non-financial objectives.
The changing landscape demands new solutions to both build and protect wealth, and while this can appear to be a challenge it is also an opportunity. Using private market returns as part of the overall investment solution, for example, is a growing investing trend in response to the increased turmoil in public markets. Private market growth is expected to continue and this, therefore, is clearly an offering to bring to our clients, especially to our private clients.
As a final note, it’s important to recognize that expectations are not just driven by market performance. The way we interact with the world and one another is changing rapidly. Tech is a huge factor to be considered – acting as both a disruptor and an innovator in the financial services sector.
At Vontobel, we work toward a completely hybrid service model for our clients – one that moves seamlessly between physical and digital service. We know our clients want both, without choosing between the two. Our duty is to offer our private clients one coherent tech and service stack to allow for this seamless and integrated experience. And that's why we are moving Vontobel’s Wealth Management and Digital Investing closer together, asking them to deliver one client experience. And while the current environment requires in-depth discussions and some very intense prioritization when it comes to resources, the long-term focus needs to be on ensuring that the client units get the tools, the investments and the technology they require in order to grow.