Getting quick and accurate data that shows if a portfolio is out of line with its objectives can, if acted upon rapidly, cement client relationships and build trust, a figure in the Swiss investment industry says.
A change of scene
The development of such a business might have appeared odd to the younger Hochstadter, a son of a Swiss banker. In his 20s he was more interested in music or the outdoors than toiling away in a bank. For a while Hochstadter ran a club in Verbier, and managed an open-air cinema. He is an accomplished horseman; when this publication did a news search on Hochstadter, it found plenty of news items about his equestrian skills. Getting the most out of all parts of life means a lot to him.
A point came where Hochstadter said he needed to spend a bit of time at least learning about finance because of his family’s wealth and the responsibilities that went with it. As a result, he went to work for Credit Suisse in the early 1990s and seized the opportunity presented to “be an entrepreneur within the bank”.
No lover of repetitive tasks, Hochstadter developed an automated portfolio management system and, over time, he ended up moving to work in the portfolio management business of the bank, based mostly in Zurich. At the end of 2002, however, now married and with a child, Hochstadter wanted a different life and to be closer to his family, so he moved to Geneva and worked with a smaller private bank, Ferrier Lullin & Cie, which was soon to be acquired by UBS. “They [Ferrier] had to reorganise portfolio management and do this quickly because they were being acquired by UBS,” he said.
He performed in this role for a year and decided, in around 2005, to get out of the banking industry and take a different career path. Deciding that there was a need for independent, non-conflicted data on the investment world, he set up Investment By Objectives. “The idea was to propose to clients to set their financial objectives, compare them to their real portfolio, discuss with their banker and then to supervise the situation by following their performance and volatility (relatively to the Libor and world equity market). It was a very simple idea, really.”
Over time, IBO developed more ways of examining whether a bank or other organisation’s portfolios and risk characteristics matched their stated objectives, or deviated from them, especially because many people joined the network and shared their results, he said.
The volatility of the 2008 crisis and the current bout of turbulence have been strong proving grounds for the value of having such performance and risk data, Hochstadter said.
Hochstadter is keen to expand his network and extend the business. At present, 10 people work at Investment By Objectives.
“You cannot be successful alone and I am looking for people who share my mentality [and] this movement towards transparency,” he says.
Besides the Continent, Hochstadter is certainly keen on the idea of doing business in the UK, he said when asked about the idea. As far as this businessman is concerned, the whole world is his target.