40 Vol. 19/18, May 2018
FEATURE JULIUS BAER
The statement noted that although
cryptocurrencies and blockchain are “an
amazing technological development”,
Julius Baer is also concerned by reports of
fraud in the initial coin offerings (ICO)
space and market manipulation on crypto-
currency exchanges.Future plans
Looking to the future, Hodler says he
largely plans to continue the company’s
M&A strategy, as well as focus on its tradi-
tional core strengths, rather than venturing
out into other fields.
“We produce maybe half our growth
through M&A, and half through organic
growth. One element of the strategy is the
concentration on wealth management,”
he says. “We really want to stick with this
pure-play wealth management strategy
and not venture into asset management,
B2B or other things – and that is something
clients like. It is very clear to us that thelooks at all the different aspects of it,” he
says. “For me, there are two different
aspects. One is the backbone of the organ-
isation, so we’ve invested a lot of money
into a new system, to automate it and
make it more efficient over time.”
Perhaps more important, Hodler says,
is the front-end technology that allows
AI-assisted machines to help analyse what
clients want and what their risk appetites
are, as well as regulatory matters such as
cross-border taxes. This system, Hodler
proudly notes, was built internally at Julius
Baer with additional input from financial
technology companies.
“What it does is constantly look at the
portfolio of our clients, and compares it
with the old static information that we
have, such as client investment profile,
defined asset allocation, and it comes up
with proposals if we have to change
something, or buy this or sell that,” he
explains. “It’s a machine that tells the
relationship manager what he has to
discuss with the client.”
On the other hand, Hodler says he is less
excited about cryptocurrencies, although
he and Julius Baer remain interested in the
potential applications of the blockchain
technology that stands behind them.
“Blockchain, I think, is here to stay.
We have looked at it already for some appli-
cations. It’s real, and companies use it.
I think it will change the landscape, not only
within banking,” he notes. “Cryptocurren-
cies are a bit different. I think it’s a lot of
speculation. There’s a lot of volatility, and
nobody knows which cryptocurrencies will
make it. I personally think that some will
make it, because the idea behind it isn’t
completely bad, but we do not advise our
clients to speculate in the cryptocurrency
field. We give them [clients] access to struc-
tured products if they want, but we tell them
it’s speculative.”
In a December 2017 statement posted
to its website, Julius Baer noted that the
bank is “negative” on Bitcoin and other
current cryptocurrencies from a long-term,
fundamental standpoint. “We believe,
counter-intuitively, that blockchain-based
‘coins’ are actually extremely deficient
currencies, as their terminal coin supply
and their velocity are both capped, making
them highly deflationary,” the statement
noted. “Their ‘safe haven’ function is a
more convincing use case, but we believe
issues also abound in that context.”
u Julius Baer generally advises clients looking for single digit returns to invest in the equity market80
Number of new relationship managers
that Julius Baer plans to bring on in 2018“We do not advise our
clients to speculate in
the cryptocurrency
market. We give them
access to structured
products if they want,
but we tell them that
it’s speculative”