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Edouard de Saint Pierre on building a strong future for the French market and the next generation

Edouard de Saint Pierre on building a strong future for the French market and the next generation

Interview with Edouard de Saint Pierre published on 20 January 2022 in L’Agefi Actifs

Six months after taking up the reins, Edouard de Saint Pierre, Managing Director of Lombard Odier France, shares what he has learnt so far. De Saint Pierre, who aims to turn France into the Group’s European flagship, has great faith in the next generation and partnerships with investment advisers.

 

You became Managing Director of Lombard Odier France in June 2021. What are your ambitions and how have the first six months been?

Lombard Odier is a family business dating back more than 225 years. I have been entrusted with the task of ensuring that the bank is keeping up with the times, serving the new generation of digital natives and entrepreneurs in general. It is essential that the weight of tradition does not push us out of step with society as it is today.

I think we are on the right track. We saw a positive revenue trend in France last year, with our business recording double-digit growth. Over the past five years, we have doubled our income. Our workforce has also grown by more than 30% in the space of five years and we now have fifteen private bankers in Paris. Lombard Odier Group as a whole manages or advises on assets of EUR 340 billion for its clients, around one-third of whom are located in Switzerland, one-third in Europe and the remainder primarily in emerging countries, particularly the Middle East and South East Asia.

The health crisis was actually something of an opportunity for us, as we have one of the sector's best capital ratios under Basel III1. In turbulent times, clients want a solid, reputable partner.

I have been entrusted with the task of ensuring that the bank is keeping up with the times, serving the new generation of digital natives and entrepreneurs in general. It is essential that the weight of tradition does not push us out of step with society as it is today

How do you keep up with new generations and a society that is in a constant state of change?

A typical banker today spends between 40% and 60% of their time on tasks that are not directly client facing. However, our profession is above all about human relationships. I joined Lombard Odier Group in 2018 as Head of the Digital Transformation Team. My aim then was to reduce time spent on administrative tasks in order to free up more "human time" for our bankers.

My appointment as the Head of Lombard Odier France is an extension of this mission. To keep up with the new generation it is imperative that we become part of their ecosystem. That is why we teamed up with France Digitale more than six years ago and have recently renewed the partnership. We need to reach young people – millennials – who currently make up just 5% of our clients, but should account for half within the next five years if projections are correct.

Contrary to what many people believe, the key to attracting this client group is not merely employing younger teams. Having a private banker who is the same age as their clients is not enough and does not really factor into clients' decision-making, provided they are on the same page.

What is the key?

We have just carried out a study on how millennials are redefining private banking. We surveyed 100 students at the ESCP Business School in Paris and the Graduate School of Management (IEA) in Nice to research the relationship millennials have with private banking. We asked them to describe the client experience they think they would have at a private bank and the experience they would like to have. The findings indicate that what is happening is more an evolution than a revolution.

It is interesting to note that the primary feeling mentioned by the students questioned was that of mistrust. The 2008 crisis has left a mark, which is exacerbated by the industry's complexity as well as its opacity. Young people want transparency – and we need to give it to them. Bank fees are impossible for anyone to understand, aside from a handful of experts. Our profession is complex and technical, but we must be able to explain it.

The students also expressed the importance of having a banker on their level. This does not mean a 25 year-old advisor without a tie, wearing trainers. It means someone who understands their values, is part of their ecosystem, and really speaks to them. This is a generation that is diligent about fact checking, and follows companies’ social media presence. It is essential to be open. If you know nothing about cryptocurrencies, NFTs or the complexities of raising funds for a new start-up, you are out of the game. Recently, a young client told me that the right banker for him would be "a banker that I'd like to have a beer with". This simplicity and mutual understanding does not come from nowhere, it is cultivated.

Yet we must be careful to move away from the cliché of the 'cool' banker, as this is no longer what they seek. When you entrust the proceeds of your start-up sale to someone, you want to be certain that this person is competent.

Above all, the key is to be present in their networks: to be there before they cash-out or scale-up and provide them with good basic advice so that you are already in position when the time comes.

All too often, major banking establishments only provide a digital response, but digital communication is no substitute for human contact. It is crucial for managing everyday interactions and administration, but it is rarely the only point of difference when it comes to decision-making.

The 2008 crisis has left a mark, which is exacerbated by the industry's complexity as well as its opacity. Young people want transparency – and we need to give it to them. […] Our profession is complex and technical, but we must be able to explain it

Is sustainable investing/ESG essential for winning over new generations?

It is fundamental, but not only for new generations. Today, everyone claims to invest responsibly and sustainably. It is very difficult to be heard. Aside from developing expertise, the first challenge is to communicate effectively and to convey the right message.

We have chosen not to take a binary approach, as is often the case with exclusionary methods. We have formed a partnership with the University of Oxford in order to develop a strategy for aligning portfolios with the Paris climate goals for 2030 and 2050. We calculate the "temperature" of the portfolios using criteria based more on "best progress" than "best in class". If you want to have an impact, you need to back companies that are changing and not focus solely on today's model students. The steel industry accounts for 7-9% of the global carbon footprint. If you manage to effect change in a sector like that, you have won. The most complicated thing is the education around this strategy, since it is not necessarily intuitive for a sustainable portfolio to include a company like TotalEnergies, for instance.

It is also important to lead by example. We are currently the only private bank in France with B Corp certification. This is a risk, as it is a difficult label to maintain, but it is also a pledge to our clients.

 

You mentioned cryptocurrencies. Are they compatible with private banking today?

It might be counter-intuitive, but new generations are much more cautious than you would think. They want stability and confidence in the assets they invest in. However, when it comes to crypto, there is something of a buzz. It is our job to remind them that the volatility of these assets is virtually unparalleled and that they are highly speculative, but we cannot sidestep the issue. For direct investments, we refer clients to specialists; for the time being, we decline to handle these investments ourselves. Our job is to find good contacts to whom we can direct our clients.

 

Let's return to your new role. What are your ambitions for France?

France is a strategic market for Lombard Odier. We have maintained a constant presence there for 20 years. Looking at the projections, France has the fourth highest growth in the number of millionaires behind the United States, China and Japan, which are all complicated markets to address. I have been given a mandate to turn France into Lombard Odier's European flagship.

I entirely disagree with the notion that France is faring badly and not evolving. On the contrary, it is proving to be incredibly dynamic, particularly with regard to entrepreneurship, which we intend to draw on for our development. This dynamism is very apparent in Paris, but also in the regions. We must become part of this ecosystem. We will achieve this in particular by working more closely with financial investment advisers, including family offices. One of my objectives is to position these partners at the centre of our resources. This is already the case in Switzerland, where we work hand-in-hand with these intermediaries.

Looking at the projections, France has the fourth highest growth in the number of millionaires behind the United States, China and Japan, which are all complicated markets to address. I have been given a mandate to turn France into Lombard Odier's European flagship

Given the current market concentration process, certain players will be looking to hunt on your land...

We can't just ignore this phenomenon and think that we can do everything alone in our corner, looking down on financial investment advisers. The aim is not to start competing with them for their client segments, but rather to see how we can help them to develop. They are part of an important network that allows us to meet entrepreneurs, and there is no substitute for their close relationships within these networks. Yet they also need us to give them access to certain services they do not offer.

I encourage them to call our dedicated team whose aim is to understand their needs and design solutions to address them. A range of sustainable products? A depositary bank? Research? An asset allocation service? There are multiple possibilities.

 

So you view this concentration as a good thing?

Absolutely. I come from a Swiss perspective, where the financial intermediary market is much more mature, which allows me to take a more optimistic view. In Switzerland, there are very large independent players that have become firmly established, and one of our major lines of revenue comes from external financial advisers.

Of course we are in competition for certain clients, but it is our responsibility to ensure that we offer enough of a difference to become complementary. I refuse to see them as rivals, as this implies working against them. Instead, we need to support them in order to work together. They already account for a significant portion of our revenue, but we can do much more.

 

1 Editor's note: Lombard Odier's Tier 1 capital ratio is 29.1%

Important information

This document is issued by Bank Lombard Odier & Co Ltd or an entity of the Group (hereinafter “Lombard Odier”). It is not intended for distribution, publication, or use in any jurisdiction where such distribution, publication, or use would be unlawful, nor is it aimed at any person or entity to whom it would be unlawful to address such a document. This document was not prepared by the Financial Research Department of Lombard Odier.

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