We talk to Laurent Pellet, global head of external asset managers at Bank Lombard Odier & Co Ltd, about the work it does with EAMs and the issues facing the sector.

Crucial to all external asset managers is that its bank can provide it with robust, user-friendly and state-of-the art technology. Lombard Odier’s platform has enabled it to deliver what EAMs need, the Swiss bank says.

Laurent Pellet, global head of external asset managers at Bank Lombard Odier & Co Ltd, is proud of how his colleagues helped EAMs adjust to the disruptions caused by the pandemic and adapt the often fast-changing requirements of clients. The onset of new Swiss EAM regulations, which put new reporting, technology and governance demands on the sector, means that Lombard Odier is particularly busy helping clients navigate the terrain as it develops.

The shift to digital communications with EAMs has gone well, Pellet said. “We have been able to interact with more EAMs than we were able to do through traditional,  face-to-face events. With web-based events, we can reach clients around the world and in many ways it has been a great improvement.”

"When you have a large EAM dealing with 20 or so custody banks you need to have a consolidated view. The choice of the PMS (portfolio management system) depends on the EAM’s structure, size and needs. There are no one-size-fits-all solutions. FIX (Financial Information Exchange) is the way the world trades and it is becoming an essential ingredient in minimising trade costs, maximising efficiencies and achieving increased transparency. The EAM inputs a single entry in their PMS, which automatically feeds back to their custodians’ own PMS," he said. 

EAM clients recognise Lombard Odier’s G2 banking platform for its impact in facilitating the order management and reporting tasks they face every day, Pellet said. “It is often too expensive for EAMs to implement their own systems,” he added.

The EAM industry has proved to be a profitable and scalable business segment for the bank. And this news service will have another chance to see the sector's development in forthcoming awards. 

“We are always looking to develop new services and products for this segment of clients and we continue to nurture the offering to serve its needs.” 

The bank, along with a number of other financial institutions such as Pictet, Ed. Rothschild and Mirabaud joined Wecan Comply, a blockchain-based platform that is designed to simplify the exchange of compliance-related information between custodian banks and EAMs. EAMs can put information onto the blockchain distributed ledger technology, shaving off the time needed to process data, making for a more efficient client experience.

Lombard Odier and Pictet, as the major players in the EAM field, defined the standards necessary for this process together. The platform was developed to simplify hundreds of daily interactions between banks and independent asset managers, reducing the workload associated with traditional compliance processes whilst sharing information in real time. 

Another move has been Lombard Odier’s investment in Taurus Group, a Swiss fintech which specialises in blockchain and digital asset solutions. Taurus was created by former Lombard Odier executives. This investment is part of Lombard Odier’s strategic approach to building its own proprietary banking technology and fostering innovation.

The bank’s work with external asset managers comes as EAMs are going through a period of significant change. With roughly 2,000 such firms in Switzerland, covering a wide variety of specialisms and types of client, it remains a complex and dynamic sector. New regulations are taking shape, as explained by FINMA, the Swiss national regulator, recently. 

“The EAM industry has shown resilience. We have witnessed many predictions of the demise of EAMs. However, the reality is that they have demonstrated flexibility and agility and have successfully anticipated many of the new challenges such as new regulatory requirements. Indeed, most of them have been able to implement changes before the regulations came into force, especially amongst the more sophisticated firms,” he said. “This is also why we haven’t seen any major consolidation in the sector yet.”

Lombard Odier had contingency plans in place for an event such as the pandemic and the firm was able to seamlessly shift to a working-from-home model, with some office-based work remaining. “We have been well organised and things have been functioning smoothly throughout.”