David Durlacher knew, when he took biology at university, that while it would not form the foundation of his career, he wanted to study something he really enjoyed, “that intellectually I found curious, I found fulfilling”.
Ultimately, however, he knew his fate lay in banking – an industry connected with his family, which for many generations had looked after Wedd Durlacher, later absorbed by Barclays to form BZW (Barclays de Zoete Wedd).
“I grew up every day, every weekend listening to the conversation of banking,” he says. “It was always a very strong interest of mine.”
Wealth management in particular held a major attraction. “I’ve always believed that is the most interesting, the most diverse, the most challenging, the most rewarding side of the financial services industry.”
Durlacher realised his aim, and is now chief executive of Julius Baer International in the UK and Ireland, part of the Swiss private bank that dates back to the 1890s when its eponymous founder opened a small bureau de change on Zurich’s Bahnhofstrasse.
Durlacher’s single-minded ambition seems to tie in with the lender’s own pure focus on wealth management, offering investment advice and discretionary asset management for people with more than £1 million.
“We just do one thing and we have been doing that one thing for 127 years… so it means that every single pound or euro or swiss franc that is invested within our business is invested for the benefit of high-net-worth to ultra-high-net-worth private clients.
“You don’t find that in your universal banks, which are more complex in their strategies.”
The group now spans the globe, with more than 6,000 staff in at least 50 locations, such as Dubai, Frankfurt, Geneva, Hong Kong, Monaco, Montevideo, Moscow, Mumbai and Tokyo, as well as London.
It is now turning its attention to Scotland, set to open an office in Edinburgh’s One Lochrin Square on 7 May, with Durlacher aiming for the firm to be the leading wealth manager north of the Border.
The launch follows what Julius Baer says is a commitment to plough substantial investment into the UK and Ireland, through new office openings in Manchester, Leeds and Dublin, and a score of recent hirings, including Calum Brewster as head of UK regional offices.
Durlacher says such investment comes as other firms are questioning their dedication to the UK. Julius Baer’s step “is counter-intuitive, perhaps, but we are long-term believers in the robustness of the country”.
Looking at Edinburgh specifically, this is to be the headquarters for Scotland, Northern Ireland and the north of England, and February saw the announcement of five appointments – all formerly of Barclays Wealth & Investment Management – to the office in the capital to support growth in the Scottish market.
Steps have been taken to boost the ranks further, but the focus is on “getting the right people rather than getting the right number”, says Durlacher.
He is bullish about the firm’s prospects north of the Border despite the Scottish economy continuing to lag behind the rest of the country, last year achieving what was deemed disappointing growth of 0.8 per cent, far behind the 1.8 per cent across the UK.
“We have a large percentage of our clients who are entrepreneurs or business owners,” says Durlacher. “We also have a large number of our clients who have been part of family businesses from farming through to technology for many years. We’ve seen that opportunity grow as the economy grows.”
He also sees the chance to leverage Julius Baer’s place in a new market as a “fairly old” entrant that itself started as a family business. It is now a public entity, in 1980 becoming the first Swiss private bank to make such a move, and describes itself as the largest firm of its kind internationally, able to bring local communities “intellectual capital from around the world”.
Given current economic conditions, many entrepreneurs want to have a global mindset, he believes, citing the news that exports from Scotland have grown by almost a fifth.
According to the data from HM Revenue and Customs, such a rise in overseas sales to £28 billion in the 12 months to September was the highest growth for any part of the UK. And Durlacher sees some firms thriving; mainly those that are export-led but also those with a global outlook.
The firm had previously earmarked Glasgow for a presence in Scotland, but Durlacher says Edinburgh is “where we’re committed to” and will serve as a springboard for growth.
“It’s an area which has a very large number of people in the financial services community and it’s an area where there is a large economic development,” he believes.
The firm’s growth into the Scottish capital reinforces the city’s growing appeal to many fellow wealth managers in what is a buoyant sector. A recent report from PwC found that 87 per cent of global asset and wealth management chief executives are confident about revenue growth this year, although that was down from the 92 per cent in 2017.
The wealth management arm of fellow Swiss group, UBS, earlier this year revealed major investment in Edinburgh, outlining plans to move to a larger site in the city and double headcount to 30 over the next two years, while private bank Weatherbys, part of the horse racing-focused Weatherbys group, said after opening up an office in the Scottish capital that it saw faster growth in Scotland than in the rest of the UK.
Brewster plays down any threat of competition, and says Julius Baer intends to stand out via its pure focus on wealth management and a more tailored approach than peers.
“Seeing other professionals in the marketplace is complementary to us. That’s the right thing for our clients and it’s the right thing for the Scottish economy,” he says.
Durlacher also notes that the number of people who define themselves as millionaires has grown by a third in two years. Figures published in February by the Office for National Statistics found that 3.6 million households in Britain held wealth of more than £1m by June 2016, up 29 per cent in two years.
“There are, despite complex political times, very strong opportunities for businesses to be successful and whether they’re in newer technologies or whether they’re in more traditional industries, we’re finding that Scotland has a strong long-term opportunity for us.”
Durlacher first joined the wealth management sector on a graduate training scheme with Merrill Lynch, which saw him lead some developments in emerging markets and opening offices in Moscow and Istanbul, but he kept returning to giving advice directly to private clients.
Joining Julius Baer when it acquired Merrill Lynch International Wealth Management UK in 2013, he says he returned to a firm that shared his priorities, and which is “prudently” run and “cares about its balance sheet”.
The Swiss group for last year as a whole reported a 14 per cent year-on-year jump in both operating income and adjusted net profit to CHF3.3bn (£2.4bn), and CHF805.6m respectively. Assets under management at year’s end were up by 15.5 per cent to CHF388.4bn.
Durlacher praises the Swiss characteristic of being discreet when handling confidential information. That said, for some such discretion can verge on tax dodging, and Julius Baer was forced to pay $547m two years ago to settle a probe by US authorities.
But Durlacher believes there has been a great improvement in transparency globally. “There is a far greater expectation that people will need to be whiter than white in how they portray their financial affairs and therefore we would not encourage clients to do anything that would be against that. We have not found that there is an appetite for schemes that are sailing close to the wind – that’s not an area that we encourage clients to go towards.”
As for the challenges that wealth management executives are most concerned about, the PwC study revealed that regulation came top at 83 per cent. Durlacher, however, says regulation is inevitable – and he singles out communication as the top hurdle. Cutting through jargon and reams of small print “to communicate simple ideas that represent complex thought is actually what our industry needs to get back to”.
Looking back at his own career, he says: “Yes, I’ve been ambitious, but I’ve also had a strong ethical bias. I’ve had a very strong view since my childhood that actually we need to do the right thing – rather than the most expedient thing.”
He also stresses his continued intellectual curiosity in a wide range of subjects beyond banking.
“I think that’s what makes a good wealth manager. They have a wide range of interests, they understand the interests that our clients hold. It enables us to understand the fears and the drivers behind them.”