With the global financial landscape constantly evolving and the UAE playing a significant role in this change, it’s only natural that international wealth management companies shift their attention to the region.
Economy Middle East spoke to Patrick Stauber, CEO of Marcuard Heritage, a Swiss wealth management firm with over 20 years of experience, on how the wealth management industry has changed and how the UAE is a key region for the future growth of the industry. Stauber also discussed issues such as the transfer of wealth, the role of artificial intelligence (AI) in the sector, and the change in approach required when catering to younger clients.
Marcuard Heritage offers a wide range of services, including investment strategies, wealth planning, and private office services. The company operates internationally with licenses in Switzerland, Singapore and Cyprus, providing a global reach while maintaining deep roots in Swiss private banking traditions.
Additionally, Marcuard Heritage has its own fund management company called Alpinum Investment Management, which offers comprehensive investment solutions, including private debt. The firm employs over 60 experts dedicated to providing top-tier wealth management services.
Here are edited excerpts of the interview:
Economy Middle East: Could you explain the concept of wealth managers or independent asset managers? What defines this industry today?
Patrick Stauber: The wealth management industry has a long tradition in Switzerland and constitutes a significant segment of the Swiss financial industry. Arguably, independent asset managers pursue a more client-focused and less conflicted value proposition than banks.
Technically and legally, the management of assets on the account of a third party on a professional basis constitutes a core activity of independent asset management or wealth management. The activity is licensed in most developed jurisdictions.
Wealth managers or independent asset managers (IAMs) provide personalized financial services distinct from traditional banks. These services focus on bespoke investment strategies, wealth planning, and fiduciary responsibility to clients.
The industry in Switzerland is characterized by its independence, client-centric approach, and expertise in managing substantial wealth. IAMs operate with a high degree of customization, offering tailored financial solutions that meet each client’s individual needs. This personalization is a key differentiator from larger banking institutions that usually provide more standardized services.
IAMs like Marcuard Heritage act as fiduciaries, meaning they are legally obligated to act in the best interest of their clients. This fiduciary duty fosters trust and transparency, crucial in managing significant wealth. IAMs’ independence allows them to provide unbiased advice free from the conflicts of interest that can arise in larger financial institutions with proprietary products.
Economy Middle East: A significant trend in wealth management is the inter-generational transfer of wealth. Marcuard Heritage boasts a long history in this area. Can you share your insights on navigating this sensitive topic for families across cultures? How can clients best plan and prepare for wealth transfer, and how does a long-term perspective influence investment decision?
Patrick Stauber: Marcuard Heritage has extensive experience facilitating the transfer of wealth across generations. This process involves understanding family dynamics and cultural sensitivities to ensure a smooth transition of assets. Early planning is crucial in this regard, as it allows for developing strategies to safeguard the family’s financial legacy. This involves creating a comprehensive wealth transfer plan, including estate, trusts, and succession planning.
In more than 20 years of our existence, we have witnessed a number of wealth transfers to the next generation. The human dimension is in focus. Giving up control, donating assets during one’s lifetime, and planning the details of what should happen after one’s own demise are all difficult topics to address for families. It’s also a challenge to reduce the complexity of diverse assets in multiple institutions and jurisdictions. However, when advice is based on trust, empathy, professional expertise and experience, the structure holding the assets, as well as the investment strategy can be transformed. This is clearly recognized by the client as the answer to long-held concerns, wishes and dreams.
We emphasize the importance of long-term perspectives in investment decisions to ensure that wealth is preserved and grows over time, aligned with the family’s goals and values. By taking a holistic approach, Marcuard Heritage helps families navigate the complexities of wealth transfer, ensuring that the financial legacy is maintained for future generations. This approach includes ongoing education and communication with all family members to ensure everyone is informed and involved.
When a family’s wealth reaches a certain size, the perception can change drastically.
Suddenly, what used to be accumulated business income without a clear purpose, or funds put aside for rainy days, is perceived as the family’s endowment.
It’s possible that a large part of the capital is of a very long-term nature, and illiquidity and market volatility are not much of a concern. This opens the door for more sophisticated asset management that also involves private markets and alternatives. The proper consideration of liquidity needs, the need to grow the capital, the time horizon and the risk profile are key and different in every case.
Marcuard Heritage advises clients to start planning early. We highlight the role of trusts and other legal structures in protecting assets and ensuring they are transferred according to the client’s wishes. By focusing on long-term planning and maintaining an open dialogue, Marcuard Heritage helps families achieve a seamless transfer of wealth that respects their values and objectives.
Economy Middle East: The global financial landscape is constantly evolving. When it comes to attracting private wealth from different regions and asset managers, which jurisdictions do you see rising in prominence? Within this context, how do you view the United Arab Emirates and Abu Dhabi Global Market (ADGM) specifically? How does ADGM differentiate itself from other financial centers?
Patrick Stauber: The global financial landscape is continually evolving, with various regions playing an increasingly significant role in attracting private wealth. Jurisdictions within the UAE such as ADGM are becoming more prominent due to their favorable regulatory environments and strategic positioning. ADGM stands out with its modern infrastructure and regulatory framework, making it a competitive alternative to established financial centers.
Marcuard Heritage views these regions as vital for future growth and diversification in wealth management. The firm recognizes the potential of these markets to offer new opportunities for investment and wealth preservation. By staying informed about global trends and regulatory changes, Marcuard Heritage can provide clients access to the most promising markets and investment opportunities.
The UAE, particularly ADGM, offers a dynamic and innovative environment for financial services. ADGM’s regulatory framework is designed to support a wide range of financial activities, making it an attractive destination for wealth management firms. The UAE’s strategic location, along with its strong economic growth and stability, further enhances its appeal as a global financial hub.
ADGM differentiates itself through its robust legal framework, which aligns with international standards and practices. This ensures a high level of trust and security for investors. Additionally, ADGM’s focus on innovation and technology creates a forward-thinking environment that supports the growth and development of the financial services sector. By leveraging these advantages, Marcuard Heritage can offer clients access to diverse investment opportunities and enhance their overall wealth management experience.
ADGM has managed to become a magnet not only for wealth managers but also for large hedge funds, institutional asset managers and new financial technologies. This environment creates fantastic opportunities in terms of synergies and collaboration.
Economy Middle East: Artificial intelligence (AI) is a growing trend across many industries. How are you leveraging AI in wealth management (if at all)? Can you provide a specific example? Furthermore, how likely is it that AI will replace human wealth managers entirely, compared to its potential impact on other professions?
Patrick Stauber: Marcuard Heritage leverages AI to enhance efficiency and improve client communication. AI tools summarise comprehensive investment management papers, making complex information accessible and understandable quickly. This approach ensures investors can grasp the firm’s extensive quarterly investment outlook in just 60 seconds, facilitating informed decision-making.
AI is also about to be used to streamline internal processes, enhancing operational efficiency and allowing relationship managers to focus more on client interaction. The firm is involved in several AI projects to optimize its services further. Using AI to handle repetitive tasks and analyze large data sets, Marcuard Heritage can deliver more precise and timely insights to clients, control the business, and mitigate risk.
However, the firm does not see AI replacing human wealth managers. The personalized service and deep relationships that human wealth managers provide are irreplaceable. AI serves as a tool to enhance the capabilities of wealth managers, allowing them to offer more efficient and informed services to their clients. AI is a significant topic within Marcuard Heritage, and the firm is actively exploring further enhancements to continue improving client experience.
AI may also play an enhancing role with regards to the knowledge and skillside of the industry. Specialist professional expertise, such as portfolio construction or estate planning with the use of trusts, may benefit from AI. This is not in conflict with the overall relationship management role of the client advisor. It’s the combination of deep expertise and solid infrastructure on one hand, and soft skills such as cultural and linguistic expertise, trust, empathy and emotions on the other hand that create the holistic experience.
Economy Middle East: How do you cater to younger clients (NextGen, Millennials) who may prefer digital tools and trendy investment options while leveraging the experience of your existing relationship managers?
Patrick Stauber: The media sometimes uses the term next-generation, millennials, etc. all in the same sentence. What is important to note is that the immediate next generation after the principal in a wealthy family is often in the 40s or 50s, not the 20s! The discussion is different obviously if we talk about entrepreneurs in their 20s or 30s, or very young heirs.
While there isn’t a substantial requirement shift for younger clients with significant wealth, Marcuard Heritage ensures that next-generation clients have relationship managers of a similar age. This approach fosters relatable communication and better understanding. The firm integrates trendy investment options or ESG reporting to align with the values and priorities of younger clients.
Marcuard Heritage relationship managers also educate and guide younger clients, helping them understand the complexities of wealth management and the importance of long-term planning. This educational approach empowers next-generation clients to manage their wealth actively, ensuring they are well-prepared to handle their financial responsibilities.
Additionally, the firm recognizes that younger clients may prefer digital interactions and tools for managing their investments. While Marcuard Heritage does not integrate extensive digital tools, it ensures its services are accessible, meeting the expectations of tech-savvy clients without compromising on the personalized touch that defines its service.
Moreover, the firm observes that young clients with substantial wealth often prefer to have their assets stored less digitally, valuing the security and tangibility of traditional asset management. This preference might change over time, but currently Marcuard Heritage balances the need for modern investment options and services with a conservative approach to asset storage, catering to the diverse preferences of its younger clients.
Patrick Stauber is the Group CEO of Marcuard Heritage. He is also a member of the Board of Directors of numerous other companies within the Marcuard Heritage Group as well as the Group Executive Committee.
Before joining Marcuard Heritage, Patrick was a managing partner of a Swiss independent wealth manager. He has also worked at Morgan Stanley in Zurich and London, as well as Citicorp Private Bank, Zurich and Citibank NA in London.
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