The market has changed due to private equity acquisitions of fund service businesses and M&A.
Rob Lowe, market head of Pictet Asset Services in the UK, told Markets Media: “We want to be known as the European asset servicing boutique for active investors. This sits within the group’s long standing legacy of serving third-party clients with a European focus.”
Pictet Asset Services offers standard and bespoke custody, fund and trading solutions, in addition to cash and securities settlements, corporate actions, valuations and reporting. The group had £518bn of assets in custody, with £289bn of assets in its fund services companies as at 30 September 2023.
Rob Lowe, Pictet Asset Services
Lowe acknowledged there is competition but quoted Pictet’s senior managing partner who said, “we don’t want to be the biggest, but we want to be the finest.” There is competition from a number of large custodian banks and Deutsche Börse Group also wants to offer a European alternative to BlackRock’s technology platform Aladdin, following the launch of its new Investment Management Solutions segment which bundles together offerings for fund managers and asset owners.
Pictet Group is headquartered in Switzerland but the first two UK clients were onboarded in asset services in 1995. Lowe said they remain keystone clients and Pictet’s focus is on client relationship management and long-term partnerships.
“There have been a lot of fund services acquisitions by private equity players and I sense that will continue,” added Lowe. “In the UK there has been some high profile M&A which has led to an increased interest in Pictet’s value proposition.”
In the UK Pictet Asset Services had a 10% growth rate year-on-year for client acquisitions in 2023 according to Lowe.
“We focus on client service excellence and we are hiring new staff in the first quarter of this year to support the growth in our business,“ he added.
Pictet Asset Services has three client segments. The first is large pension funds, mostly out of Switzerland for whom Pictet provides global custody. The fund services business in Luxembourg primarily supports Luxembourg fund promoters, as well as offshore funds.
The third client segment is independent asset managers or third-party wealth managers, which is where Pictet is seeing the most traction in the UK, said Lowe.
“We have a long-standing and strong presence in the UK but now is our time to shine as there has been a lot of change in the market over the last 12 months,” he added.
Technology
Pictet’s technology strategy is to leverage open architecture which enables the group and clients to work with a range of portfolio management systems (PMS) and order management systems.
“We currently have approximately a dozen PMS providers who enable full automation and efficiencies of scale for our managers, with more platforms under implementation,” said Lowe. “We have seen a 100% rise in client implementation in the last two years which shows our technology-driven growth agenda.”
The firm has a client portal, Pictet Connect, which provides a single interface giving managers access to portfolio data holdings, analytics and transactions and also connects directly to the portfolio management system architecture. Pictet Connect can also provide access to the group’s integrated brokerage platform so managers can do bulk order execution under a best execution basis, and foreign exchange was recently included FX directly in the tool.
One trend that Lowe identified is wealth and fund managers starting to come together and a blurring of the two distinct client segments.
“The relationship managers in the UK work in a hybrid capacity so they can cover both and clients have a single point of contact,” he added.
Another trend that Lowe expects to continue is clients trying to generate alpha through going into new products and services, such as alternative investments.
“From a services perspective, we have a 70+ strong team in Luxembourg that supports private assets,” said Lowe. “We recognise our responsibility to be a credible service provider to support the growth of that asset class.”
