Investment Officer Luxembourg recently had an opportunity to speak with Stephan Matti (pictured above), Group Head of Asset Servicing & Financial Intermediaries at Quintet Private Bank, about his role and the advantages of offering asset servicing and financial intermediary services from within an organisation that also has a large private banking operation.
He also explained how his clients view the Sustainable Finance Disclosure Regulation(SFDR) and the EU taxonomy.
Matti joined Quintet in late 2019 following a decade as Head of Global Financial Intermediaries, Switzerland, at UBS Wealth Management. During his over 25 years at that firm, he also led wealth management activities in Southeast Asian markets out of Hong Kong and Singapore. He’s Swiss and is based at Quintet’s office in Zurich.
At Quintet, he leads the Asset Servicing & FIM business, providing solutions to financial intermediaries such as multi-family offices, investment funds, corporates and private investment companies. Along with wealth management, the institutional and professional segment makes up a substantial share of Quintet’s overall business.
Interview
Q. What is the distinction between Asset Servicing and Financial Intermediaries and how does this speak to how you seek to address the market?
Our Financial Intermediaries business serves external asset managers, multi-family offices and other licensed professionals mandated by their clients to manage their assets. We currently offer FIM services out of three Benelux locations (Belgium, Luxembourg and the Netherlands) and will soon also do so from the UK – covering offshore and domestic client requirements, including in the other markets where we have a strong local presence.
Our Asset Servicing business is composed of an Institutional Funds desk, Bank & Insurance desk and Private Label Fund Solutions desk; together, they focus on providing global custody and execution services from Luxembourg across Europe.
Q. What is the advantage of offering these services from within an organisation which also has a large private banking operation?
The needs of UHNW clients are increasingly complex, demanding services that in the past were reserved to institutional and professional clients. At Quintet, we serve such clients, including UHNWIs and family offices – who have established investment vehicles across various markets – through our Asset Servicing solutions.
At the same time, our Asset Servicing & FIM clients value their partnership with a boutique custodian that is small enough to be personal, yet large enough to offer access to the world. With a local service delivery model, we can be close to our clients, which allows them to benefit from easier communication, quick decision-making and responsive service.
Q. What is your impression of how clients and the market have been adapting to SFDR? Specifically, how is your firm managing the change to classifying funds as article 6, 8 or 9?
The market reaction to SFDR is, generally, pleased there is an EU-wide regulatory standard but frustrated by the mismatch between the significant financial disclosures required and the lack of necessary corporate disclosures.
In terms of clients, there is no consensus: two similar funds may carry different article designations with two asset managers taking different interpretations. Certain local regulators also diverge; the Netherlands allows funds to stretch to Article 8 from Article 6 in order to improve disclosure, while Belgium is reserving the word “sustainable” in marketing material for Article 9 funds only. None of this detracts from the positives: SFDR is a well-intentioned attempt at harmonisation and codification.
Q. What about the taxonomy? How is the market reacting to the next wave of green investing regulation? How do you try to help them manage this risk?
The taxonomy has caused much debate about what constitutes “sustainable”. That debate continues between EU member states and our clients have their own contrasting views.
There is a general concern about how the regulation can keep up with technological change – put simply, what is “good” today in terms of carbon intensity for a number of industries won’t necessarily be “good” a decade from now.
At Quintet, we can observe evolving market standards and reactions from our open-architecture wealth arm, execute and live the regulation article by article in our asset management business and bring those insights to our asset servicing and FIM clients through our firm-wide sustainable investing team.