In recent years, there has been a clear strategic shift in advisory away from a transaction-based approach towards a portfolio-based model. What is EFG’s approach?
Yes, this trend towards a portfolio-based model is primarily client-driven because a more holistic advisory approach better captures the overall risk and return characteristics of their investment portfolio and identifies inherent correlations between underlyings. Market dynamics have shifted the investment bias of private clients towards higher-risk assets. However, the near-continuous rise of equity markets in the last few years has also left clients worrying about the total risk exposure of their portfolio. With a holistic view, clients require more in-depth advice – creating opportunities for them but also for the bank.
At EFG, we recognised this trend early on and decided to rethink the way we offer advice to our clients. The result is a revamped suite of advisory services that should help us deliver an even better client experience and to increase advisory penetration.
Have you observed any regional preferences in terms of the type of client typically requesting an advisory or discretionary mandate?
Yes, absolutely. Advisory is not a one-size-fits-all business. Clients from one region may have a clear preference for fixed income, while those is another region may favour equities and structured products. This is why our advisory services are always tailored to local client needs. Personalisation is of the utmost importance when it comes to advising wealthy clients. The typical advisory client is financially savvy and dedicates time and passion to the management of his or her wealth. These clients also want to be in full control of all investment decisions at all times and to actively engage in investment discussions with our Client Relationship Officers and Investment Counsellors. In contrast, discretionary clients have less time to devote to their investments and are therefore seeking the convenience of a mandate that allows them to set out their overall investment goals and then leave our experts to implement the corresponding investment strategy.
What do you consider to be the key trends in Advisory?
Several trends are very obvious at present. In general, clients want individually tailored advice − in other words, portfolio solutions that not only reflect the client’s risk score and investment objectives but also his or her investment preferences. EFG is committed to delivering individual advice and this principle is at the heart of the recent revamp of our Advisory offering.
From an investment perspective, ESG and thematic investing have emerged as key trends. We are also seeing strong momentum in the area of structured products, which can be almost perfectly tailored to specific client needs. Finally, less liquid investments such as private equity continue to attract substantial client interest due to their superior risk/return characteristics.
To what extent is digitalization influencing the way you work?
Service delivery is being transformed by new technologies. The corona pandemic was a huge accelerator of digitalization and the advisory business of the future will be more digital, mobile and interactive.
You mentioned ESG investing as a key trend. What is EFG’s approach to this theme?
Our Asset Management business EFGAM has developed a proprietary scoring model that we use to score investments for our Advisory business. We are continuously expanding our offering of ESG-compliant products and services and, at the same time, are regularly scanning our investment universe for non-compliant securities and subsequently removing them. Last year, we created a new family of investment products under the “Climate Leaders” umbrella. These products have been very successful, and we will continue to grow this offering. And of course, there is much more to come with respect to ESG-related advisory and discretionary services.
You said that EFG has revamped its advisory offering. Can you tell us about its new features?
We launched our revamped advisory services on 1 October. Our advisory service models are simplified and modular, and they offer a high degree of individuality and are clearly differentiated. We focused on the client experience when designing the new offering to ensure that our advisory services cater for a broad range of client needs. This means that clients can choose between three different models with distinct client benefits. At the core of each model is the interaction between the client and EFG − via our Client Relationship Officers, Investment Counsellors and Asset Class Specialists. While we differentiate between service models based on the desired intensity and sophistication of service delivery, we provide clients with full access to our investment capabilities, irrespective of the model selected. Initial client feedback on our new offering is very encouraging and this confirms that we are moving in the right direction.
* For Switzerland and Luxembourg only
Profile of Michael Krinner:
Michael Krinner is Global Head of Advisory & Sales at EFG. Before joining EFG in 2020, he managed the European Advisory Business at the Liechtenstein-based bank LGT, which he also represented in the Liechtenstein Bankers Association. Michael Krinner began his career at Credit Suisse, where he held several management positions in the Asset Management division. He holds a degree in Economics from the University of Zurich and he completed an MBA at the University Lausanne and the Carnegie Mellon University in Pittsburgh.