Banks Persuading Private Clients to Adopt DPM Mandates

Banking CIO Outlook | Monday, January 11, 2021

Banks to focus more on making private clients adopt DPM mandates for some parts of their AUM with Lombard Odier, stated Jean-Louis Nakamura.

FREMONT, CA:Jean Louis Nakamura, Chief Investment Officer, APAC, and head of the Hong Kong office at Swiss private bank Lombard Odier, has constantly stated in recent years that banks in the APAC region are concentrating more on their efforts on persuading private clients to adopt DPM mandates for some elements of their AUM with Lombard Odier. Furthermore, he added that they have really focused a lot of effort on this in the last five-plus years and more properly refined and articulated what they had to do on the DPM side and the advisory side in the last 18 months forging both into a holistic portfolio strategy. According to Nakamura, this is centered on a comprehensive portfolio approach, which combines the best institutional-type, methodical investment processes with additional judgemental, emotionally driven market orientation. He added that this combination would bring the finest of both worlds together.

Nakamura expands on the drive to improve and promote DPM among the bank's private clients, explaining that the way the bank was managing DPM, and the value proposition promoted to clients from roughly six years ago when they embarked on this initiative, was centered on telling those clients that the bank could offer them something beyond what they could do themselves. A few years ago, banks evolved their approach by developing and communicating a higher value proposition through a more systematic quantitative approach that maximizes the effective level of analysis and investigation into ideas and stocks. He further stated that this approach had various merits, especially when its performance tends either to concentrate or to disperse, in the market or in places that they did not anticipate performing well. However, the result will tend to be better than the traditional approach to handling money.  On the contrary, when the market tends to concentrate performance on segments, where everyone is constructing their own bets, such as when it was focused on tech names two or three years ago, or cyclical names six months ago, the more traditional strategy tends to outperform. As a result, they have taken the best of all worlds approach.

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