Citywire - For Professional Investors

Register free for our breaking news email alerts with analysis and cutting edge commentary from our award winning team. Registration only takes a minute.

Zurich AM head: democracy keeps our firm alive

1 Comment
Zurich AM head: democracy keeps our firm alive

Walking into the offices of Albin Kistler for the first time at 7am on a weekday, you might think you had got out of the lift on the wrong floor.

Striking abstract artwork hangs on a wall just a few steps away from a red and yellow neon sign that screams ‘Research Lab’. Large windows let the sunlight pour in, illuminating the colourful chairs that are dotted around the office.

At first glance, it looks more like a punchy start-up than a traditional wealth management firm.

Around the office, employees have their noses buried in newspapers. It’s a mandatory task ordered by company founders Norbert Albin and André Kistler, head of asset management Benjamin Schoch (below) explains.

‘Other companies might say, “Why are you reading the newspaper? Don’t you have a job to do?”’ he says with a laugh. ‘We read the daily newspapers, which are mandatory for everybody, and then we distribute responsibilities for other journals.

For example, one person has to read The Economist and if they see an interesting article about healthcare, they send it around.’

The newspapers are only a tiny fraction of what the analysts and portfolio managers have to read. They are constantly studying and discussing world events, financial results and company information, putting into practice Albin Kistler’s reputation as a firm built on two things: research and teamwork.

Dream team

The company was founded a little more than 20 years ago, when Norbert Albin and André Kistler joined forces. They believed that together they could do investment management better than the banks.

Both founders had established track records in finance and research. Albin worked for UBS Singapore and UBS Tokyo before spending 11 years as an executive in the stock market division of UBS Geneva, while Kistler had worked in the research departments of Strauss Turnbull & Co. in London and Fiduciary Trust in New York before branching out into asset management at Vontobel.

‘They started on the green fields. No assets under management and no clients. They built the company from scratch, and now we’re at CHF 5 billion,’ says Schoch, who has worked for Albin Kistler for five years.

Prior to this role, he worked as a senior investment analyst and consultant for various consultancy companies, including PPCmetrics in Switzerland.

‘When they built this company in 1995, they said, “We have to do better investment analysis to find the companies that will outperform in the future.” It’s all about research. It’s not about selling products or about being speculative. It’s about finding the best companies to invest in.’

Votes for everyone 

Twenty years and 35 employees later, Albin Kistler is made up of two segments: the asset management division, which takes care of institutional clients, and the private client division. Despite being two separate areas of the business, they share a unified investment process.

Like a game of Jenga, keeping performance at its peak means that each decision must be made carefully while paying attention to the bigger picture.

‘The investment committee meets every Monday at 4pm. We debate and discuss every decision being made, and every stock we would like to put money into needs the formal approval of the investment committee,’ Schoch says.

‘Every team member has one vote. It’s a democratic process – if the majority wins, we buy, and if it has been refused, we don’t buy. Everybody knows this process, and everybody adheres to it.’

This is something that sets Albin Kistler apart from some of the major banks, Schoch notes.

The firm doesn’t believe in a seniority principle or a star manager approach. Instead, it relies on a team made up of various levels of experience and differing backgrounds, with employees drawn from sources as diverse as banks, universities, investment consultancies and more.

These varied backgrounds are part of what has kept Albin Kistler’s in-house research team alive in an era of outsourcing – something that Schoch calls ‘no topic at all’ for the firm, which now has 20 analysts.

He notes that some of the analysts have up to 20 years of experience working in their sectors.

Keeping their expertise in-house has given the boutique an upper hand when researching and selecting stocks, he says.

‘Our analysts build up experience over time covering a sector, and that helps us a lot. You see the same management of the same company and you’re closer to the company. We do everything on our own, based on our own research database and management contacts,’ Schoch explains.

No experiments

Schoch also notes that working in varied and specialised sectors is something that encourages employee retention and promotes longevity – a feature that also reflects the company’s steady
investment approach.

‘We are an active, long-term investor. We don’t do any derivatives or alternatives, and we never take extreme positions. No experiments,’ he says.

‘Clients come to Albin Kistler because they want a reliable portfolio manager. They don’t want a trader or a hedge fund manager. They know we’ve been doing our jobs the same way for more than 20 years, with the same philosophy, and they like that.’ Schoch says that after the financial crisis, Albin Kistler’s client base spiked.

‘Clients had bad experiences with banks, so they came to us because they knew we really keep our promises. Within their accounts, they had structured products or products they didn’t understand, which didn’t perform or deliver the returns promised.

‘We do an account analysis and say, “We can change that. You can just have a simple account with equities and bonds, where you see what you have in each company.” Full transparency is something we don’t even have to convince them on.’

Albin Kistler currently offers five funds: a Swiss bond fund, a Swiss equities fund, a global equities fund, a foreign currency bond fund and a small- and mid-cap Swiss equities fund. The first four make up the Albin Kistler Balanced Portfolio.

‘We don’t launch regional or thematic funds. That’s not what we do. We’re quite happy having the four funds that make up our investment universe, plus the small- and mid-cap fund, which is what clients prefer,’ he says.

The firm launched these funds in 2013 in order to meet the regulatory requirements of running pension fund money. However, Schoch says the launch only came about because it was the right decision for the firm.

‘We always said that if we launch a fund, it has to come at the same price as direct investments and bring full transparency. If we can’t guarantee that, we don’t launch the fund,’ he explains.

Transparency also ensures that clients will be presented with a well-justified portfolio, Schoch says, as the majority of the roles at Albin Kistler are multi-faceted.

Employees work on both the research and client-facing sides, creating a culture of accountability when it comes to presenting clients with the right offering. ‘We rarely have a pure role, because most of the private clients love having a sector analyst at the table who is also a client adviser.

‘In bigger financial companies, the portfolio manager doesn’t see the client. They can pick stocks or funds that they wouldn’t invest in themselves.

'We have to stand in front of our clients. I know this customer who’s in front of me every year or more often. I know that it’s his
money, and it’s important. It’s more personal.’

Passing the baton

Schoch says that about five years ago, clients began to ask about the future of Albin Kistler. The company has since put together a succession plan that ensures the boutique will still be around decades down the line.

The plan’s main feature is a deal with Graubündner Kantonalbank (GKB), which the firm signed two years ago. GKB became an anchor shareholder, acquiring 25% of the company, and recently increased its stake to 51%. However, the deal does not come at the expense of Albin Kistler’s individuality.

‘The bank has guaranteed us that we can keep our investment philosophy and process. There will be no interference in terms of investments,’ Schoch says.

He also notes that the founders still maintain an entrepreneurial spirit, continuing to hire new people every year and allowing current employees to share innovative ideas.

‘They still want to invest in the company. They say, “We want Albin Kistler to outlast us.” They want to pass on the spirit and keep the company going. They want it to reach 100 years old.

‘The hierarchy is very flat in our company. If someone has an idea, they can walk up to the founding partner and ask, “Why don’t we do something different?” That’s a part of our culture of discussion and being open-minded.’

Schoch also notes that the remaining 49% of Albin Kistler is not set be sold. Instead, it will be left with the founding partners and the employees for years to come, carrying on its legacy as sturdy firm that’s built to last.

This article originally appeared in the September 2018 edition of Citywire Switzerland.

Leave a comment!

Please sign in or register to comment. It is free to register and only takes a minute or two.