Private banking: “We cannot talk about wealth management until we talk about wealth planning”, says Serge Fehr

Serge Fehr has spent his entire career supporting private clients. He is passionate about leadership, is both inspired and inspiring, and combines a sense of discipline with genuine kindness. On top of these skills, he has nearly 30 years’ experience in key positions in private banking in Switzerland.

Lombard Odier’s prudent approach, together with its values and independence, convinced him to join our Firm in the summer of 2023. A native of Geneva, Serge Fehr has been travelling throughout Switzerland nearly every week for the past 10 years to meet with customers and employees of his local teams. SBB rail cars have indeed become his second office. We sat down with him in Geneva to learn more about his vision regarding the development of private banking and how to best serve the interests of our clients.

The needs of private banking clients have changed significantly. What changes have you noticed over the course of your career?

If I compare my generation with my parents’ generation, there is one thing that really strikes me: one didn’t talk about money with one’s parents. Discussion is much more open today, whether it concerns money or a number of other social issues, and that’s regardless of the level of wealth. The new generation, i.e. people aged between 25 and 50, are significantly more involved these days in managing the family assets.

Furthermore, these new generations are immersed in the information society, so they have more knowledge of financial markets and ask more questions. We noticed this last year during our survey of Swiss investors, who want to better understand their own investments and specific investment themes, such as private equity or sustainable investment. Finally, while the fundamental needs of protection and growth of assets span the eras, the approach to serving customers and addressing their needs is changing significantly. 

How do you support these new generations?

By adapting a family-oriented and multi-generational approach. By listening a lot and asking questions ourselves! It is our bankers’ responsibility to know their clients well so that they can support them in the best way possible. Indeed, life projects between generations can be similar, but they can also differ considerably. 

We actually encounter the first pitfall in the parents’ generation. They sometimes put off discussions about succession, because that means planning the period towards the end of their life, which is naturally not pleasant for anyone. However, long before talking about succession, we can introduce new generations to the management of family assets by involving them in decisions, informing them about investment strategies, and discussing the objectives they want to achieve.

Younger generations do not always identify private banks as priority financial partners. How do you approach this?

This is often due to a perception which fades as soon as we start working on specifics with these new generations. The banking landscape has changed enormously in recent years, and this includes private banks. We currently have a number of complementary models available. Whether we look at century-old institutions or new banks, each of these has tended to specialise in what they do best.

Moreover, Fintechs are mostly focussed on very specific products or services, along with a “do it yourself” approach, in order to reduce their costs. However, this approach quickly reaches its limits in the case of clients with greater wealth, who need holistic advice. Ultimately, entrepreneurs and wealthy families alike need tailored support and a global approach to optimising and growing their assets with peace of mind.

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Thanks to digital solutions and increasing mobility, we are seeing more and more often that clients like to work with several banks. To take the example of entrepreneurs, it is common for them to have an online bank for payments, an all-purpose bank for the company’s cash flow, another local bank for a mortgage and a private bank for their wealth management. Against this backdrop, the role of private banks is to provide comprehensive asset management and offer long-term perspectives.

Before you joined our Firm in the summer of 2023, you spent more than 25 years in a private banking unit at Credit Suisse. What lessons did you learn from that experience?

Whether we speak of one or the other institution, I would say that we cannot talk about wealth management until we talk about wealth planning. To put it another way, and this is where the added value of a private bank lies in my opinion, engaging in portfolio or asset management without having a personalised wealth planning strategy is a shaky undertaking. Of course, investments are essential to create value, but they must be thought through and integrated into a framework of life and projects, and not purely in relation to financial markets.

investments are essential to create value, but they must be thought through and integrated into a framework of life and projects

Without well-structured wealth planning, a lot of value can be destroyed. So if, for example, a client comes along today with a certain amount to invest, yet I have no idea of their plans, I will make investments based on their risk profile and market conditions. But if this person is moving abroad in three years, wants to buy real estate or start a business, it is very likely that their investments are not appropriate for these goals. Or it could be that it is not the right time to sell them because we would lose value, due to changes in the markets, costs or taxes. Which is unfortunate, yet avoidable.

This is why wealth management goes hand in hand with wealth planning. And this is fully in line with Lombard Odier’s expertise and offering to clients, such as tax-efficient multi-pocket strategies and the Your Wealth Outlook offer, as well as all the Bank’s capabilities in terms of far-sightedness and deep experience in inheritance planning and even international mobility, for example.

The creation of wealth and assets has been greatly stimulated by entrepreneurs in recent years. How do the services of a private bank adapt to their specific needs?

Entrepreneurs are often focussed on their business, and that’s quite normal. They generally do not have the time to take care of their assets. Private banking services are a particularly good fit here because they allow entrepreneurs to have a structured overview of their private wealth. Quite often, in fact, their assets are almost entirely concentrated in their business. Yet the assets are not available, in the sense that this value is not “liquid” and cannot be accessed unless the company is sold.

Selling a business is an upheaval in an entrepreneur’s life. It is also revolutionary in terms of their wealth, and this must be planned in advance

In a context where the entrepreneur remains active professionally, we will help them plan a more balanced and diversified distribution of their wealth, in line with their life projects. We assess what should be distributed in a salary or dividend for example, having regard to the legal and tax framework. We can prepare several scenarios so that the entrepreneur can comfortably make informed choices for the future.

Many entrepreneurs in Switzerland will sell their business or pass it on in the years to come. How would you approach this transition? What is the role of the private bank?

Selling a business is an upheaval in an entrepreneur’s life. It is also revolutionary in terms of their wealth, and this must be planned in advance. We can help entrepreneurs manage the capital resulting from the sale of course; however, our experts also support them well in advance, as the sale of a business is something that is planned over several months or even several years. Entrepreneurs sometimes have an idea that their business is worth ‘X’, when in fact, in today’s market, it is perhaps worth 20% more or 30% less. Either way, the impact is considerable for future projects. This is especially true for entrepreneurs who go for a sale relatively early in their business career.

Such as the entrepreneurs in Zug, for example, where Lombard Odier opened an office last year?

Yes, exactly. Zug is a booming canton. It has become an exciting and innovative entrepreneurial ecosystem. We had a brilliant opportunity to open an office there and we seized it. For a private bank like Lombard Odier, Zug is a laboratory of ideas that encourages us to innovate in order to provide the best services for entrepreneurs.

For a private bank like Lombard Odier, Zug is a laboratory of ideas that encourages us to innovate

With this new branch, I think we now have a particularly efficient network enabling us to stay close to our clients, along with our offices in Geneva, Lausanne, Zurich, Vevey, Fribourg, as well as Verbier. Thanks to the local and international experience of our bankers, our investment specialists and our wealth planning experts, we continue to consolidate our leading position in Switzerland with every passing year.

Given recent increases in life expectancy, we have never had so many retirees in Switzerland. Many people who are still working are pondering their retirement and how to finance it. How do you approach these issues?

Retirement has been one of the main concerns of Swiss people for several years. Even for the youngest generations! Maintaining your lifestyle is clearly a major issue today, accentuated even further by the return of inflation. Wealth planning is crucial in this area as well. Talking about it, structuring, planning – these are the first steps to implementing tailored strategies for each situation.

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The framework of occupational pension provision has also changed significantly over the past decade, paving the way for more customised and tax-advantageous asset management. This is particularly attractive for people who still have several years of work left, such as entrepreneurs, senior executives or those who are self-employed. Lombard Odier’s offering is very impressive in this area, both in terms of expertise and tailor-made services.

The inheritance law reform, which came into force last year, also resulted in more freedom in planning the transfer of wealth to future generations. What do you need to pay attention to in this regard?

We do have more freedom today with redefined reserved portions, leaving a larger portion of the estate outside of these legal constraints. But you still need to make a will to take advantage of this freedom. Yet in Switzerland, we tend to deal with it too late – or not at all – partly because the tax framework is less “confiscatory” than in other countries.

Still, our experience shows that if we demonstrate to families how their wealth will be distributed under the basic legal framework – if they do not make any donations or wills – they immediately see that it suits neither their needs nor their wishes! In addition, depending on the type of assets they hold, or the place of residence of the heirs, the tax burden can be much higher than they expected. This is where bankers must bring their expertise to the table, along with the support of specialists, to make families aware of the importance of planning inheritance, and to support them in preserving their estate, from generation to generation.