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Cover star: Geneva adviser's tactics for expansion revealed

Cover star: Geneva adviser's tactics for expansion revealed

Almost all of us know that distinct feeling of inadequacy when the person on the other side of the table can speak not two or three but six languages. English, French, German, Italian, Spanish and Polish.

At 40 years old, Nicole Curti (pictured) is the definition of ‘international’ and has successfully nurtured Stanhope Capital’s Swiss hub in Geneva from the ground up.

Curti first made the leap in 2008 at just 31 years old, leaving the safety of Lombard Odier after meeting Stanhope Capital founder Daniel Pinto, who was looking for a global custodies solution for a client.

Disillusioned with the self-promotion of the private banking sector and never one to fear a challenge, Curti decided to leave the bank, which she says was weighing on client relationships. Having joined the boutique she immediately embraced her newfound freedom, launching the Geneva office by herself.

‘It was scary,’ Curti says about her first few days. It’s a feeling CIO Christophe Karpiel (pictured) empathises with: ‘it’s not so easy to have a lot of freedom.’

The truth is that level of freedom can make or break a person in a short space of time, but it offers tremendous rewards for those who rise to the challenge, and it has turned out to be the best decision she’s made.

Her distaste for the conflict of interest that arises from pushing in-house strategies gels perfectly with the philosophy of Stanhope Capital, which remains a pure independent adviser.

Make or break

Unassisted in the Geneva office, Curti found herself starting from scratch in one of the most financially challenging years in living memory.

‘Coming from a big institution with over 2,000 employees, you had back-up in terms of lots of resources.

If you needed something you simply picked up the phone and the matter was dealt with.

‘When setting up Stanhope’s Swiss office, on day one, it was simply me and an empty office. It was extremely challenging but a great experience, and I learned things I would never have been able to do in a bigger institution– everything from getting to grips with VAT to IT system installation – while also developing a client base,’ she says.

From tracking down a suitable office to choosing a pension fund for the employees, Curti wasted no time in building the machinery that underpins all businesses and hasn’t looked back.

While its Swiss operation was still in its infancy, as a group Stanhope Capital was well established in the UK market with 20 people in the London office.

Fast forward 10 years and today the global investment office oversees more than $10 billion worldwide for 140 wealthy families, charities and other institutions with more than 80 employees spread across offices in London, Geneva and Jersey.

The Geneva office has grown tenfold, from the one-woman operation of 2008 to five in 2014, which necessitated an office move, and finally to a 10-strong team by 2017.

The decision to open a Geneva office was based on Switzerland’s appeal as a rich hub of experience in wealth management, but also its reputation for confidentiality.

In addition, some prospective clients had voiced reservations about working with a solely UK-based manager and expressed a preference for a Swiss service.

Starting out

Stanhope Capital was founded by Daniel Pinto and Julien Sevaux in 2004 following conversations with five prominent European families covering approximately $600 million in assets. All five expressed similar concerns over their existing private banking solutions, as they discovered their portfolios were filled with in-house strategies.

‘If you sell, you cannot advise,’ Nicole explains.

With this in mind, Pinto and Sevaux determined to avoid this trap while also shunning the retrocession model.

The third founding requirement was that all partners should invest the majority of their liquid wealth alongside the clients in the company as a means of achieving ‘intellectual honesty’, Curti says.

Stanhope Capital’s client base is as international as its Swiss head: a third are in the UK, mostly ‘res non-doms’; a third are from continental Europe; and the remaining third are spread across the globe.

The group exclusively manages clients with $10 million or more, with the average account size currently standing at $50 million-$70 million.

‘Our ambition is to be the European family office or private investment office for this type of client, $10 million and plus,’ Curti says.

Finding these clients was the biggest challenge she faced in setting up the office. ‘It’s one thing to set up the office, but you need to get clients in before they shut the office down again.’

With this fundamental requirement now a distant memory, Curti has had time to widen the client base by targeting larger clients. There has been a recent trend of signing clients of $100 million and above.

As clients of that size are too large for a one-size-fits-all solution, Curti has started to move into the illiquid space, investing in private equity, private credit and physical real estate.

Overall, the trend is to add more illiquid assets such as private equity and real estate to portfolios. Historically you can see different approaches depending on the nationality of the client, Karpiel explains.

‘For example, LatAm clients wouldn’t be comfortable with a high-octane portfolio (60-70% in equities), and would prefer to have only 30% in equities and 60-70% in local market bonds. But if you take a UK client, he or she might be more relaxed about fluctuations in the equity market.’

UK clients have a preference for growth stories, Karpiel says, with a typical equity/cash balance that is a little less diversified than international clients.

French clients, meanwhile, require a more balanced solution.

Thematic investments

As well as the move towards illiquids, the second hot trend among clients is thematic investments, Curti says, particularly in robotics, AI and automation.

Although clients seeking exposure to these areas is new, it’s not a new idea to markets, so the investment team has the option of funds but also trackers, structured products and certificates.

‘We are sometimes more comfortable with certificates or structured products where we can precisely define the kind of theme we want to play,’ she explains.

‘The problem with thematic funds is usually having a wide enough universe. They have to have very low filters, and we try to avoid too wide a universe, so sometimes we will use trackers or structured products.’

The boutique has been moving into the robotics theme over the past six months in line with client demand.

Funds in the space typically have a short track record, which has counted against them, and the group has instead looked to trackers, which have a longer track record and a narrower investment universe.

From dipping their toes into illiquids to finding automated approaches to robotics, investment ideas at Stanhope Capital are fuelled by a high-profile and diverse line-up on its investment committee and advisory board.

The committee is formed of partners, including Karpiel, but it is also enriched by external members who are not employees.

This includes family office veteran Richard Oldfield, founder and executive chairman of Oldfield Partners, a value-style asset management firm with more than $4 billion in assets under management.

Contributing fresh perspectives on the macro front is James Ferguson, founder of MacroStrategy Partnership, whose previous experience predominantly focused on the Japanese market at investment banks Nomura, Robert Fleming, SBC Warburg, Dresdner Kleinwort and Mitsubishi Securities.

Former UK chancellor of the exchequer from 1990 to 1993 and a member of parliament for 25 years, Lord Lamont also sits on the investment committee.

The investment committee is not the sole idea generator at the firm, which also runs an advisory board that meets quarterly, made up of high-profile thinkers with non-financial backgrounds.

This distance from the financial world can offer a valuable perspective and help avoid group-think, Curti says.

‘The risk you run when you meet too regularly is that you tend to always discuss the same ideas. Sometimes you need an external view,’ she says.

The board is chaired by Lord Browne, former Group Chief Executive of BP and current managing director at Riverstone Holdings.

Sir Martin Sorrell, chief executive of WPP, Lord Lamont, Shafik Gabr chairman and managing director of the Artoc Group for Investment & Development, Dr Pedro Aspe and Stephen Lash form the advisory board.

Allocation spread

The firm’s global allocation is fairly balanced, Karpiel says, with around 50% in equities, 20-25% in bonds, roughly 5-10% in cash and the rest in investments including hedge funds, commodities and tactical funds.

When it comes to fund selection, Karpiel favours mid-sized managers he can get to know in person to avoid discrepancies between what the manager says and the behaviour of the fund, style drifts, moves in the management team and due diligence concerns.

It is crucial that the manager invests his or her own money into the fund, a principle that fits with Stanhope’s foundations.

The boutique is agnostic about the active manager/ET Fs debate. As Karpiel explains, it all depends on the current market cycle. ‘If you have a market that is trending upwards we will prefer ET Fs, but in more volatile markets, we think that active managers can outperform.’

The group accesses the bond market for the most part through short maturity funds with a low duration.

Karpiel reveals plans to invest in inflation-linked products without duration risk. A solution in the works is structured products that could benefit from an inflation rise, he says.

Even so, the group has fewer investments in structured products than is traditional for Switzerland, but more than is the norm for UK-based investors.

Curti says they first broke into structured products for yield-enhancement purposes as several clients in Switzerland had a conservative, balanced profile with outflows and expectations of coupons.

‘When market volatility was higher, you could get structured products on the Euro Stoxx 50, for example, with a 5% coupon which is useful for clients who need to plan their cash outflows,’ she says.

Nonetheless, structured products remain a small part of Stanhope Capital’s offering as they do not suit all client types.

In the current environment a key concern from the investment side is finding uncorrelated or negatively correlated assets to balance and de-risk portfolios, Karpiel says.

The easiest way to gain protection is to hold cash plus equity, but today cash costs money, he explains.

This is while bonds have been ruled out as a solution with rising rates and credit linked to equity risk in the case of a big event.

Reaching out

Expansion plans at Stanhope Switzerland include an initiative to cater to US resident clients with an application for SEC registration, as they have spotted a growing trend of clients moving into the country.

The boutique is already SEC light registered out of London and can manage US structures so long as the resident is not in the US.

‘I’m confident that we will grow quite rapidly in Switzerland because we have become a major hub for our London office and the specialists within the Stanhope Capital Group for our family office clients,’ Curti says.

In fact, Curti reveals ambitions to double assets under management for the Geneva hub over the next two years.

Other prospects for growth for the group as a whole include the possibility of a new office in Paris or Luxembourg with the potential loss of the European financial passport due to Brexit.

There are also sources of growth in Latin America as the company already has somebody working out of Miami.

The pace at which the firm is growing internationally is a reflection of its highly international clients and staff. Curti is in international territory at Stanhope Capital, she says, as the staff and clients come from more than 30 different nationalities, offering different approaches to teamwork.

‘What’s important when you’re in a venture like this is that you surround yourself with the right people, both internally and externally, who will help you reach your goals.

‘That is the most important lesson: if you do not share the same values as your colleagues, you cannot create a collaborative team and you won’t be excited about going to work. I’m extremely fortunate to work with a great group of people, all of whom have contributed to the success of our business today,’ she says.

With this philosophy guiding her decisions, Curti has forged the ideal team in her Geneva hub over the nine years since launch.

A mother of two, Curti took on the challenge of setting up the business while managing a family in her spare time.

‘The time that I don’t spend at work is really for the family,’ she says a week after returning from a skiing trip with her seven-year-old and four-year-old.

There’s a clear parallel between the close-knit nature of a family and the interpersonal dynamics of a successful boutique.

‘What’s amazing here is that you’re in a relatively small organisation. So compared with bigger institutions we’re lean and mean as decisions are taken quickly and there’s no politics.’

With a versatile, multicultural approach to decision-making, Nicole Curti has cultivated a resilient hub in Geneva for Stanhope Capital and positioned the boutique as a leader in the Swiss industry.

 

This article was originally published in the May issue of Citywire Switzerland.

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