The Big Interview: David Durlacher, CEO of Julius Baer International
and live on Freeview channel 276
He started out in the sector via a graduate training scheme with Merrill Lynch, and joined Julius Baer when it acquired Merrill Lynch International Wealth Management UK in 2013.
The Julius Baer Group is ultimately headquartered in Zurich, dates back to the 1890s, and is now present in more than 25 countries. In 2018 it made its debut in Edinburgh, with an office in Lochrin Square.
Mr Durlacher, a University of Edinburgh graduate, has previously said his interest in a wide range of subjects beyond banking is an asset in wealth-management, having always believed that the latter is “the most interesting, the most diverse, the most challenging, the most rewarding side of the financial services industry”.
It is now more than three years since Julius Baer launched its regional business in Scotland – how would you characterise progress to date? Milestones have included joining Scottish Financial Enterprise. How are you supporting high-net-worth and ultra-high-net-worth individuals here – and what is unique about the Scottish market?
Progress has exceeded all expectations. We have a very talented team covering a market witnessing buoyant merger-and-acquisition activity, with significant wealth-creation as a result.
But we don’t see Scotland as entirely unique; this trend is mirrored across our UK footprint. One thing though that is very clear in Scotland is that our clients very much value our close proximity, the quality and track record of our team, our commitment to the region, and our global view on investment solutions.
Scotland has a rich history of entrepreneurship; where do you see opportunities for Scotland’s multi-generational family firms, as well as those that have founded their own highly successful businesses more recently?
Family is at the heart of Julius Baer and our origins date back more than 130 years. Scotland has always been a hotbed for innovation; entrepreneurship is part of its DNA. With 19 universities, the highest cluster in Europe, there is access to a talent base that is helping sustain the growth of businesses at all stages of the entrepreneurial life cycle.
In particular, we are seeing the development of global aspirations from Scotland in fintech – from data research, artificial intelligence, and cyber security, amongst a number of other sectors that show Scotland’s strength on the world’s stage.
Can you explain how the pandemic has altered Julius Baer's dealings with clients, and more broadly its effect on the wealth-management landscape? You’ve previously touched on how clients have been focusing more on the impact their wealth is having on communities and on the environment, for example…
In many ways the pandemic has brought us closer to clients. They generally had more time during the crisis, home working meant they were much more accessible, had more time to consider broader family priorities, and in many cases gave them an opportunity to gain perspective.
It was a great opportunity to demonstrate the value of our relationship. Having said that, we are a people business, and it is great to see clients face to face once more.
When it comes to the broader landscape, I think the lockdowns also provided an opportunity for the industry to rethink its approach to flexible working, travel and the wellbeing of its employees.
We’ve also seen this reflected in the investment interests of our clients. The myth that sustainable investing was a bull-market luxury was well and truly debunked last year and we’ve seen a real shift in attitudes to sustainable and impact investments as well as our next generation investment themes, most notably the future of mobility and cities.
What else are clients focusing on right now – to what extent are newer sectors attracting interest?
Clients see investing as an opportunity to do good as well as gain financial returns and we’re very much in step with that.
Another sector where we’ve seen a real rise in interest is the private equity space, particularly around technology and healthcare. Outside investing, many of the clients I’m speaking with are focussing on their businesses, implementing new strategies and ways of working, and capitalising on the lessons learnt from the pandemic. We’ve seen that the companies who are agile and resilient to change have thrived.
How much is the company's presence in Scotland driving its UK growth ambitions, and if we look another three years ahead, what would you like its operations north of the Border to be achieving?
Like our other offices around the UK, the growth that we have seen in the last three years here validates the decision to expand and gives us even more confidence about the years to come. We said at the outset that our expansion was a long-term commitment and that has not changed. In three years’ time, I’m hoping our Scottish operation will even dwarf London! We have a little way to go, but we don’t lack ambition.
Julius Baer is the EY Entrepreneur Of The Year UK headline sponsor, and – ahead of the final in November – you have praised finalists that are “opening up new markets, driving change and becoming recognised for their achievements”. Can you give more details on this?
We have been amazed at the quality of finalists this year. Alongside our sponsorship of the Entrepreneur Of The Year Ireland programme, this is very much a celebration of entrepreneurship across the UK and Ireland.
We see lots of evidence of businesses breaking new ground – from engineering to cosmetics, biotech to alternative energy – and these entrepreneurs are paving the way, leading innovation and establishing rapid market share domestically and internationally. We are delighted to partner with EY and to play a crucial advisory role for the finalists and alumni.
Additionally, Julius Baer International has signed up to the Diversity Project and the Women in Finance Charter. Can you explain more about what prompted involvement in these initiatives?
As an industry, we have a collective responsibility to improve diversity and inclusion (D&I) for the benefit of current and future clients regardless of their gender or background. To do this, we need to hold ourselves to account and continue to look for ways to improve our approach to D&I and develop new ideas to guarantee a diverse workforce and inclusive culture in the future.
I firmly believe we can accelerate our efforts to make improvements. We have the data we need to identify gaps or issues, we have an environment and technology where we can offer flexible working and recruit talent regardless of location – it’s time for us all to commit to making real change in this space over the next few years and put actions where our words are.
I’m pleased to say that the work is already being recognised as this year we were presented with the WealthBriefing Award for Diversity in Wealth Management.
Amid hurdles such as Brexit as well as the pandemic, what do you see as key drivers of economic recovery?
The UK as a flexible and innovative free-market economy has good preconditions to deal with the current economic challenges, such as changed patterns of consumption in the post-Covid world.
Besides reopening effects, the most promising growth driver for the recovery from the pandemic is excess savings built up during the pandemic, as well as pent-up demand, which is already translating into robust consumption. However, growing inflationary pressures, in particular from supply-chain issues are curbing the pace of that recovery.
The UK ranks reasonably well (within the top 20) in international comparisons in terms of competitiveness as well as innovative capabilities, and these factors are also very important growth drivers.
The biggest challenge to UK growth is probably the notoriously low productivity growth throughout the last decades. Brexit is compounding low productivity, as its impact on labour supply across a range of sectors is a serious inflationary risk and drags on productivity.
A challenge in a post-Brexit world will be to ensure that regulatory and tariff regimes end up supporting the long-term flexibility, growth and interests of the UK economy across all sectors. Uncertainty and bureaucratic hurdles need to be resolved so that businesses can properly plan and invest for the future.
What do you see as the biggest challenge for Julius Baer currently?
I think that the biggest challenge is coupled with a fantastic opportunity. The pandemic has seen a huge shift towards working digitally for the business and our clients. One topic we have already seen strides forward in is digital onboarding.
A way to onboard clients more efficiently is regularly at the top of many businesses’ priority lists, and with the comparatively complex regulatory requirements we have in our industry when it comes to a client onboarding, it is one that has the tendency to remain on the priority list for some time.
The regulatory side coupled with the breadth of due diligence required may raise eyebrows among some potential customers. But those who get it right – and I hope Julius Baer is one of them – will be creating an even more attractive proposition for the next generation of clients.