Vincent Duhamel is head of Lombard Odier for Asia-Pacific & Japan, based in Hong Kong. He was recently interviewed by WealthBriefingAsia.

Founded in 1796, Lombard Odier & Cie is the oldest
firm of private bankers in Geneva and one of the
largest in Switzerland and Europe. It has a network of 25 offices in 18 countries,
and offers its private and institutional clients a wide range of
advisory services in wealth management, financial products, and specialised
areas.

Lombard Odier has been in Asia for over 25 years, with
offices in Singapore, Hong Kong and Tokyo  and more than doubled its presence in Asia over the last two years.  In Japan it has partnerships with Bank
of the Ryukyus, Yamaguchi Bank, Shizuoka Bank, Momiji Bank, Chiba Bank,
Kitakyushu Bank, ibis Capital Partners, Okazaki Shinkin Bank and Kagawa
Securities. In addition, it has formed partnerships with JBWere in Australia
and KB Kookmin Bank in South
Korea.

Vincent Duhamel is head of Lombard Odier for Asia-Pacific
& Japan, based in Hong Kong. He is
responsible for the development of private banking and institutional wealth
management in the region. He was recently interviewed by WealthBriefingAsia
about strategy and recent developments.

In the broadest terms,
where do you see the position of Lombard Odier
in the Asian wealth management market at the moment and for the next few years?
How do you want the business to develop, and why?

Lombard Odier sees itself as a haven for clients in turbulent
times, and that is the same in the Asian wealth management market. Asia is the
engine of tomorrow’s growth, with huge potential in the private banking sector with UHNW individuals on
the rise in Asia. Singapore is exceptionally
well-poised to take advantage of this expanding group.

The way we see the
business develop in Asia and in Singapore
is for us to develop a fresh approach toward family offices that commits to the
long haul. Given that opportunities abound in the region, to make UHNW a
profitable segment to serve, private bankers need to innovate in servicing
clients who have multi-generational issues, and develop strategic long-term
planning that will preserve a family’s wealth.

How many people are
employed in your part of the firm? Are there plans to change the number and if
so, can you give me some sort of idea in terms of numbers?

With more than 100 professionals in the region and 20 in Singapore, we have
expanded our service to clients and more than doubled our presence in the
region over the last two years. We are always looking for skillful, experienced
people who share our values and are interested in innovative ways to help
clients better meet their need for risk-adjusted returns.

Are there recent specific
additions to the team you would like to highlight and mention in terms of
importance?

In
Hong Kong, we have recently added Fred Horsey, who joined in September as co-chief
operating officer and general counsel, as well as Christophe Morel, who
relocated from Geneva
to become the chief risk officer for the Asia-Pacific team. These positions are
newly created to enhance our operational excellence. Fred and Christophe bring
energy, insights and expertise in operational and internal development and
their appointments significantly enhanced our ability to add value for clients
in Asia Pacific.

We
more recently appointed Keiichi Hirano as managing director for Japan, who
succeeds Norbert Joué. Mr Hirano is one of the pioneers of Société Générale’s
private banking business in Japan
and held various senior roles in Tokyo and Singapore where
he was global head of Japanese private banking clients and responsible for
functions including marketing, and Société Générale’s global head of real estate.

Mr
Hirano will work closely with Mr Joué, who has successfully led our Japan business for the past four years from Tokyo, to ensure a smooth
transition. Mr Joué is moving to a broader regional role in Asia for the bank
working closely with Mr Vincent Magnenat, local managing director of Lombard
Odier in Singapore.
In this newly-created Singapore-based post, Mr Joué will take the lead to
develop our integrated private client offering in Asia.

What kind of strategy are
you employing to develop the business? What sort of markets are you
particularly interested in, and what are you more wary of, and why?

Most
private banks and investment businesses still offer to construct portfolios in
a bullish environment based on a 60 per cent allocation to equities and 40 per
cent allocation to bonds. In a bull market they switch that to 60 per cent
bonds and 40 per cent equities. An investor might think they are well
diversified like this, but that approach leaves investors at the mercy of
correlating asset classes in a downturn because in reality 90 per cent of the
portfolio’s total risk is in equities, so that when the market falls, your
portfolio will follow.

Instead,
we focus on an actively managed risk-based approach which divides a portfolio
between different asset classes to provide diversification of volatility, or
risk. With each asset class accounting for the same amount of risk, the goal is
to offer better risk diversification with limited draw-downs and over time, a
much smoother, transparent performance, whatever markets do.

This
thinking lets us help clients to think about the risk that they take and manage
their draw-downs. With each discretionary mandate tailored according to a
client’s risk appetite, investment horizon and preferences. This works for
individual clients as well as institutions such as China’s Social Security Fund, which
signed up in 2012.

Where do you mainly source
new managers from? Has this changed recently, with more focus on in-house
development vs external recruits? What is your approach to talent management
and how you work with external recruiters, etc?

We
are always looking for relationship managers with the right balance of skills.
It’s important in our business to expand horizons and look not just at private
bankers but other wealth management institutions where there may be people who
have the technical financial expertise and the relationship skills, so that we
can learn from them and above all add value and bring solutions to our clients.

How does your firm relate
to the Lombard Odier business in Switzerland? How much autonomy are
you given?

We
are a truly global company and have a network
of 25 offices in 18 countries. With $211 billion under management and custody
at the end of June 2013, the Group employs about 2,000 staff and offers its
clients wide-ranging advice in the areas of wealth management, financial
products, and specialised services. We enjoy autonomy in the local markets, but
also work closely with our headquarters to align strategies and targets, as
well as share research and market insights.

Given some of the issues
facing Swiss banking at the moment, does the “Swiss” provenance of Lombard
Odier work as a plus for you in Asia?

Our
structure, rather than our Swiss origins, means that we take a different view
of risk. Because we have no external stakeholders and no debt, we can play
long-term and invest where we think it is needed long term. That means our
partners’ interests are completely aligned with the interests of our clients
and creates an emotional and capital ownership with a more prudent approach to
risk taking.

We
take the view that if you look back over the last 200 years since we were
founded, there have been around 40 crises. That means there’s a crisis every
five years - which really means that we either just after a crisis, in a crisis
or about to go into another crisis.

When
you think like this your attitude to managing money and risk is completely
different than a manager who expects that somehow markets are going to come
along every now and then and save him from any bad decisions.

Fitch,
the ratings agency, for example, gives us the highest rating possible for a
bank of our size – and our Tier One capital is more than 22 per cent, more than
twice the level required in Switzerland.

How do you see the Lombard “brand” evolving? What sort of steps do you take
to spread it, raise awareness? Is your acquisition of new clients mainly a
word-of-mouth affair, or are there other channels?

We’re not an events management company so we don’t sponsor Formula
One or golf tournaments. We believe in trying to offer clients material that
informs the way they think about and plan their wealth.

That means the brand has to develop based on our values and
principles which are all about helping our clients to make better investment
decisions.

We try to create thought-leadership opportunities for our clients,
for example giving them opportunities to meet with Al Gore for discussions
about sustainable capitalism, or with Kenneth Taylor, the former Canadian
ambassador to Iran,
who speaks eloquently about managing geopolitical risks. Mr Taylor of course
recently became famous through the movie “Argo” which told the story of his
work during the 1979 hostage crisis and provides an excellent opportunity for
our clients to understand the dramatic impacts disturbances in the Middle East can have on their portfolio.

The investment management
process at Lombard Odier is a very distinctive
one, given its focus on how to approach risk. Can you tell us a bit more about
that?

We adopt a long
term perspective and value the independence of our operations. We take a
risk-based investment approach, where our bankers minimise drawdown for clients
through specialist teams managing different kinds of risks.

Investment
managers traditionally encourage clients to spend too much time focused on
allocating capital, rather than looking at tolerance to risks. Our approach
takes that into account to help clients to achieve their investment goals and
make sure that we help to position a portfolio in such a way that you can sleep
at night, whatever the market does.