Partnership Profiles: Bordier & Cie, working the traditional way

5 November 2001

Partnership Profiles: Bordier & Cie, working the traditional way

The founders of Bordier & Cie, whose first customers were Huguenot exiles and French aristocrats who sought refuge in Geneva, have not chang...

The founders of Bordier & Cie, whose first customers were Huguenot exiles and French aristocrats who sought refuge in Geneva, have not changed their chief activity of asset management for wealthy individuals and their families in two centuries. Unlike many of its competitors that have expanded, some virtually beyond recognition, Bordier & Cie, founded in 1844, is still a traditional partnership private bank with a total of 110 staff. Gregoire Bordier, 35, one of three managing partners, said the bank had consciously maintained a narrow focus on asset management for private clients, with no institutional or corporate clients, feeling this was the best way to serve existing clients and that an ingrained sense of caution had paid off. "We see our performance compared to our competitors as fine. That's one of the main reasons why we're happy with net inflows of new assets. Clients will move their accounts from one bank to another for two main reasons: performance and services, both of which are easier to control in a partnership environment," Bordier said. "Clients don't care about online strategy. They work long hours and don't have time to check their accounts online. They're more interested in performance," he said. Last year saw record profits while assets more than doubled to SFr7bn over the past ten years. Bordier estimated that as much as five per cent of this asset growth was fuelled by an influx of new clients, while the rest had been boosted by a strong market performance. "We see this year (2001) as more difficult. No doubt revenues will be down," he said, declining to give any inkling of the bank's balance sheet. Indeed, traditional partnership-based private banks like Bordier are not required by law to publish such figures. Managing partners like Bordier are "banquiers privées" in the original sense of the word who have their family fortune invested in the bank and take unlimited liability. At least one partner must carry the bank's name but even the most traditional partnerships have often taken on the non-family partners. Bordier has two other partners, Gaetan Bordier and Pierre Poncet, who became the first non-family manager in 1991. The largest segment of clients, 35 per cent, are wealthy individuals from Switzerland. Some 20-25 per cent of the remainder are French, ten per cent are UK-based and ten per cent are Spanish while the rest are spread worldwide with individuals from Japan, Eastern Europe and the Middle East. Minimum investment is SFr500,000 with an average investment of SFr2m while 90 per cent of new clients are referred by existing clients or financial advisors. Clients choose between 100 per cent discretionary management, which means they give their relationship and their asset manager carte blanche to invest their money while others are more involved in the management of their portfolio. Bordier said the advantages his bank could provide clients were: steady performance and a stable and close relationship with one asset manager. The firm seeks to provide "easy access to that manager, a clear picture of their portfolios, a reasonably broad spectrum of services including fiscal and legal advice". Some of these were similar to, but not full-blown family office services, he said. Bordier consciously offers "a limited choice in-house products", the few on offer tend to target clients with small portfolios and cover traditional geographical allocations: Europe, Switzerland and the United States. About 15 per cent of client assets, possibly as little as ten per cent are invested in funds, he said. About 70 per cent of these are in-house and the rest outsourced. An average client account would have between five and 15 per cent in alternative assets. The bank has a long history of involvement in hedge funds and was one of a group of banks to launch the first European hedge fund, Hausmann Holding, in 1972. Bordier said an average client portfolio had between 40 and 60 per cent in both equities and in fixed income, such as bonds, treasury bills and money markets. A few had as much as 100 per cent either equities or fixed income. Bordier charges clients employing a combination of the traditional Swiss flat-fee system, which can be between 0.6 per cent to one per cent or an average of 0.8 per cent depending on the size of the portfolio, and about 0.4 per cent commission on earnings, so that average fees are around 1.2 per cent of a client's assets under management a year. Bordier, with its headquarters in the heart of Geneva's old banking quarter, has representative offices in Zurich, Berne and Monaco as well as in London where it also owns a 45 per cent stake in Berry Asset Management.

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