CXO: Innovating for growth

About Unigestion

At Unigestion, our single-minded focus is to offer robust, tailor-made investment solutions to a limited number of sophisticated institutions and families. We have EUR 17.2bn of assets under management, 94% is managed on behalf of more than 270 institutional investors and 6% on behalf of a few high-net-worth families. The stability of this client base allows for long-term vision.

Unigestion is headquartered in Geneva and has offices in major financial centres around the world. This international presence ensures both comprehensive local market research and a good understanding of the local dynamics which govern our clients’ activities and requirements.

The global investment management industry faces much complexity and many challenges. In this recurrent CXO Corner relay column, we ask top executives to point the way ahead, sharing their views and best practices for meeting the challenges.

Journal: You’ve been with Unigestion since 1994. Can you walk us through your professional journey in the organization.

Régis Martin: I originally joined the company as an assistant to the CFO, taking over from him in 1999 when he launched our investment management department focused on private equity. In the early 2000s I took over the legal department and began establishing our compliance and risk management teams.

Back then, we were barely breaking even. We’d just sold our private banking entity and had essentially started our institutional investment management business from scratch. We were still relatively small, with around 30 employees, but gradually we won new clients and grew from there. We went from almost EUR 0 AUM to nearly EUR 17 billion AUM today, with 200 employees.

In 2011, I was appointed Deputy CEO, taking over supervision of our service platform teams, which includes, to name a few, IT & Logistics, Finance, Legal, Risk Management, and Operations.

Journal: Tell us a bit about Unigestion – your industry and how business has transformed in the past 8 years since the Global Financial Crisis? Have the key competitive differentiators changed?

Régis Martin: We operate in the institutional buy-side industry, servicing pension funds, insurers, corporates and sovereign wealth funds.

What is unique about this industry is that there is a thorough due diligence process from the clients (on top of the heavy regulatory requirements). This means that there is a comprehensive process to win new business, but also when servicing our clients.

What we’ve noticed in the past eight years in particular has been a growing and continuous pressure on fees. Even as AUM in the industry continues to grow, we have put a lot of energy into being able to adapt to this growing demand and volume. As a result, we had to diversify into new asset classes (from hedge and private equity funds of funds to direct equities and liquid alternative investments) and to optimize our production costs.

What we’ve noticed in the past eight years in particular has been a growing and continuous pressure on fees. Even as AUM in the industry continues to grow, we have put a lot of energy into being able to adapt to this growing demand and volume.Régis Martin, Deputy Chief Executive Officer and Chief Financial Officer, Unigestion

Journal: In your role as Deputy CEO, you supervise teams in Unigestion’s Service Platform, which includes, IT & Logistics, Finance, Legal, Risk Management, Operations. What are your biggest challenges in this role and how do you ensure that the teams work together and share knowledge?

Régis Martin: Information sharing is by far my biggest challenge, and I spend a lot of time ensuring that all the various teams are properly informed so that we can execute efficiently and effectively. This is extremely important, especially when we onboard new clients. Our teams across IT, compliance, operations and legal must work hand in hand to set the new account up, to do it properly. Each team must deliver in sequence in order to meet the timeframe promised to our clients.

As with any organization, it is often a challenge to have everyone on the same page at the same time. To overcome this, I meet my direct reports weekly or bi-monthly to ensure alignment across teams and share information with each other so that we can fine tune and find solutions over any blocking points.

Journal: Unigestion has EUR 17 billion AUM – how do you stay competitive as a boutique asset manager? What role does time-to-market for new products, asset classes and client relations play?

Régis Martin: As a boutique asset manager, our clients and prospects expect the same standard from us as from the large players. We are in competition with the large players, so we need to not only be able to offer the same level of services, but also go the extra mile in order to stand out from the crowd.

The challenge is, how do we offer all the services that the large players can give? We are a niche player and we try to give more in terms of performance and service, as well as offering tailor made solutions. In an effort to command higher fees than the big players, we have to bring additional value.

Being able to deliver these higher levels requires that we can cope with them in the back end. This is really important and requires that you standardize and automate your internal processes. Sadly, it’s stuff that clients do not see, but it is vital. Otherwise we’d struggle. This is where IT plays an important role. We needed scalability to be able to support new clients, to manage more and more sophisticated financial instruments, and increased AUM.

Journal: There is a lot of focus on growth in the industry today, even though the industry still faces pressure on fees, an ever-increasing amount of regulation, and an ongoing struggle with data and manual processes. How does Unigestion manage to focus on growth, while at the same time, overcoming these challenges?

Régis Martin: So I talked a little earlier about pressure on fees being a big challenge at the moment. We had to adapt by industrializing our operations to optimize costs. Apart from that, regulatory compliance is certainly top-of-mind.

We have a very strong culture of compliance, and we have been staying up-to-date year after year in terms of what we need to do. Our commitment to compliance has meant that over the years, we have developed a great process for approaching regulation. For instance, it is smarter sometimes to wait rather than being the first one to implement. I don’t mean that we leave it to the last minute, but rather, you need to sense when the right moment to implement new regulations is. If you do it too early, then the rules may change, and then we are forced to start over. If you wait to late, you may rush things or worse, not be ready for go-live. So there is a balancing act to consider.

Journal: What is the solution to overcoming these challenges? Is it organizational or is it technological?

Régis Martin: It is definitely both. Obviously you need to have the technology, but you also need the people and processes in place if you are to manage the technology and use it properly. As I see it, people put the processes and technology in place and after that it is a matter of managing this triangle as efficiently as possible.

Sometimes the technology may only be 1% of the solution. You must remember that it is a tool, it won’t solve all the issues for you. That means that if you don’t have the right people and processes in place, then you can’t use it properly.

Journal: There are a lot of different ways Unigestion can grow, but do you see new product offerings, M&A activity, and entering new geographies as relevant methods for Unigestion?

Régis Martin: We believe in organic growth. To drive this growth, we set up dedicated sales force five years ago which was complimented with an alternatives sales team and a distribution sales team in 2016.

M&A is of course always an option, but only when there is a really good match. So this is on an opportunity-basis only. We have no plans or desire to buy for the sake of buying. Integration of another company is never as easy as people think, so it really has to be a perfect match.

We are also expanding globally. We have seven offices around the world, the most recent one in Canada in 2014. IT plays an important role in growth. To grow, we need help sustaining it with our IT platform. We want to offer more sophisticated products, more alternative products and our IT platform is an enabler for this. Our previous in-house built platform couldn’t support new financial instruments.

Journal: Unigestion is known for its innovative research strategies – can you tell us a bit about them?

Régis Martin: As a boutique asset manager with scale, innovation helps us punch above our weight. Two years ago, we established a process to support innovation in the organization.

We have a dedicated innovation process in place where anyone can come with an idea, which may lead to a product or service for clients. We have established a five step innovation process. From idea generation to transformation into a product, an investment solution or simply enhancing an existing process.

We have established a five step innovation process. From idea generation to transformation into a productRégis Martin, Deputy Chief Executive Officer and Chief Financial Officer, Unigestion

There is a fine balance between pushing new ideas, to finished products, but also selecting what to put effort behind, and what to leave. Important way to sell ourselves against the big players. What we also love to do is to co-create with clients. Usually it comes from pieces of research that we share with a client and then become the cornerstone of something tailored for them or even shared with other clients having the same needs. We recently launched two co-created products that a client helped to seed and that are now available for everyone. This is greatly appreciated by the team.

Journal: Thanks very much for sharing your interesting insights with us. Is there someone in the global asset management industry whom you would like to pass on the CXO Corner interview relay?

Régis Martin: I would like to hand over to Philippe Ricard, Global Head, Asset & Fund Services, BNP Paribas Securities Services. With his considerable professional experience, I am sure he will have some interesting things to say about what he views as the biggest challenges and opportunities facing the industry going forward.