blue - Trust is liberating

blue The magazine for private clients

Trust is liberating Summer Edition 2014

“The heart thrives in the sunshine of trust.”

Jean-Jacques Rousseau

Editorial

Dear readers, The modern world would no longer function without division of labour. In industry, a company can optimise its manufacturing processes by outsourcing segments of its value chain. Likewise in terms of humanitarian organizations, we support charities that, thanks to their experience and structure, achieve greater efficiency on location than any individual could do. Tasks are delegated in the personal realm as well: we entrust our children, for example, to schools that take over their education.

Trust, and the knowledge that someone knows how to do the job better, are the prime conditions for passing a task on to someone else. If these conditions are met, then you create freedom for your own activities.

I wish you a stimulating and exciting read on this theme of trusting others and earning trust.

Sincerely,

Zita Langenstein and Silvia Danailov are two women whose commitment to their work is characterized by competence and passion. In spite of the very different challenges they have to deal with, they have one thing in common: they both know that you can only be successful if you put trust in others, as people have put trust in you.

Georg Schubiger, Head of Private Banking

Read the customer magazine “blue� on your iPad. With the Vontobel publications app, you have access to the latest publications from Vontobel.

Download now at: www.vontobel.com/app Vontobel blue 3

© Sandro Diener

© Ethan Hill

Content

10

Trusting in others – in figures.

Amazing facts from around the world.

12

Good service is worth gold.

Sometimes people trust someone else to make the impossible possible. That is one of the requirements of a butler.

Zita Langenstein, the first Swiss woman to have earned a butler’s diploma, explains what else you need to succeed in that exciting career.

4 Vontobel blue

© Shutterstock

6

When delegating saves lives.

10,000 tarpaulins, 4,600 water containers, 5.5 million water purification tablets, tents, mobile warehouses and much more were delivered by UNICEF within two days after the earthquake in Haiti. Only when all the tasks are delegated correctly is such a thing possible. An insight into the organization behind such an effort.

© iStock

16

Relying on the potential of the masses.

There is a sociological theory that the crowd can be smarter than the individual. Based on placing trust in the crowd, new methods have emerged to take advantage of this “swarm intelligence” via the Internet.

Macro: Eurozone has emerged stronger from the crisis, despite all the doomsayers.

Institutional lessons learned from the crisis, and the impact on the future.

Competence: A question of trust.

The challenges of modern asset management are many. With a thorough analysis of your personal situation and objectives, your client advisor helps you get orientated.

24

Competence: A wide range of trading possibilities – Vontobel has the know-how.

New trading venues are emerging,

© Lucerne Festival

18

© Shutterstock

20

© Shutterstock

and the traditional markets are losing their monopoly. Shares are now traded in parallel at different locations. What does this mean for executing orders?

26 Blue Page: News from Vontobel.

A compilation of news from all our business areas.

Vontobel blue 5

6 Vontobel blue Thema

Theme

Good service is worth gold.

Interview: Angela Obrist // Photos: Sandro Diener

When serving becomes the dream of a lifetime: Zita Langenstein, a native of the central Swiss canton of Nidwalden, is the first woman in Switzerland to become certified as a butler. In our conversation with her, she tells us about this diverse activity, relates some anecdotes from her professional life, and explains why she believes that fundamentally, all of us serve someone.

Many kids dream of becoming a pilot, a princess, or an astronaut when they grow up. But already as a little girl, your career choice was to be a butler. How did that come about?

Even before I started school, there was a television series I really liked in which the main character was a distinguished Count, and he solved all these criminal cases along with his butler. Even then I knew I would never be a Countess. But I became very intrigued by what it was that the butler did. I liked the way that he clarified certain situations for the Count. For example, he always undertook certain very skillful advance actions, and that was what made it possible for his boss to solve these critical problems. I was really impressed with the butler’s autonomy.

over again – unfortunately never successfully, because it was not until the year 2000 that the school finally accepted women for the first time. When I was also accepted that year to start my training as a butler, it was for me like a dream come true.

How did your friends and family react to your career choice?

I told my mother that I wanted to become a butler, and of course, she had to laugh. But this dream stayed with me all through my school years. Here in Switzerland, though, the profession was practically unknown. When it came time to choose a vocational education path, I opted for the hospitality industry, and I did two apprenticeships, one in service and one in management.

In the movies, the job is often portrayed as a relic of a bygone era. Is it really a “dying” profession?

Not at all! In fact, I’m even convinced of the exact opposite. Of course, there is this stereotype of butlers, and we have to laugh about that ourselves. The fact is that thanks to an increasing demand for service, there is a need today for a lot of butlers. But there are too few trained specialists. In general, a butler manages an entire household. I recently worked for a household that employed 18 people – that’s more than many small and midsized hotels in Switzerland have on their payroll. So, excellent organisation is essential.

In spite of this education, how did you become the first Swiss woman to hold a diploma as a butler?

A few years after I finished my professional training, I met a butler in person in the course of my work at the Hotel Schweizerhof in Bern. He told me about his training in London. I suddenly felt that my dream was once again within my grasp. In the late 1980s I applied to the prestigious Ivor Spencer Butler School in London, but unfortunately I received a response turning my application down. Over the next few years I applied over and Zita Langenstein regards delegation as a demonstration of appreciation, since it shows that one person trusts the other and feels assured that he will accomplish the task conscientiously.

This professional domain is still very much male-dominated territory. How do people react to you?

When you work as a butler, people should ideally recognise you in this capacity alone – and other factors should fade into the background. So for a butler, it is the greatest compliment when a client, who hasn’t been introduced to him yet, still comes up to him and asks, “You're the butler, right?”

When do you need a butler?

You can’t really generalise like that. Whether someone lives in an one-bedroom apartment or a huge villa, in both cases a butler could theoretically be necessary. Most employers of domestic servants want to manage their time differently. There are certain things that they cannot or will not do themselves, so they delegate them to professionals. In Switzerland, there have probably never been so many households with a professional staff as there are today.

Vontobel blue Theme 7

How do you feel about delegating?

I see delegating as something absolutely positive and think people should delegate much more. I’m happy that I work with a lot of competent people, because the better the staff is, the more you are able to delegate. This is not about passing off unpleasant work to someone else! Instead, I see it as a gesture of appreciation when you entrust a domain to someone else.

The idea here is that you trust the other person, and you’re confident that they will do the job conscientiously.

bridge, and the jubilee celebration of Her Majesty Queen Elizabeth II, where I was able to work. Once I had a client I looked after who wanted 100 long-stemmed roses within an hour – which is a challenging task if you are on an estate way out in the countryside. In the end, we flew the flowers in by helicopter and got them on time. Many of the tasks a butler has to deal with day in and day out are enormously challenging, but when you’re able to do something for your client that seemed impossible at the time, it’s hugely rewarding.

What have been some of the highlights of your work as a butler so far?

I’ve really had many extraordinary experiences. I’m particularly fond of the memories I have of the wedding of Prince William and Kate Middleton, now the Duke and Duchess of Cam-

What kind of character do you need to have to be a butler?

An important quality for a butler to have is probably the ability to stay in the background and accept the fact that you may not get a “thank you” every day in your work – but at some point you will be sincerely thanked. Other than that, you have to enjoy serving others and working closely with people. You should be able to master difficult situations effortlessly and anticipate challenges. It is also very important to have a great sense of empathy. For example, a butler should notice if his client is thirsty and know how to bring her a glass of water without disturbing a meeting. Finally, it’s also important to have a healthy sense of humour.

What do you mean?

Laughter at work is very important for me. You should be able to maintain a smile even on a hectic day or after a difficult situation.

And you should be able to laugh at something together with the client. Contrary to the movie clichés, many butlers laugh while they’re working – even the ones working for Queen Elizabeth.

Of course, this isn’t a proactive thing, but a passive one. But if a client tells an amusing story, of course you can laugh with him about it – after all, you’re still a human being.

Zita Langenstein is Head of Continuing Education at GastroSuisse, the Association of Hotels and Restaurants in Switzerland. She completed her own education in hotel management and as a corporate training specialist, and has a butler’s diploma from the prestigious Ivor Spencer Butler School in London as well as a diploma in management from AKAD. In her current role at GastroSuisse, Ms. Langenstein trains staff and managers in hotels and restaurants. Her areas of specialisation are the development of service quality, etiquette, and leadership in hospitality.

In addition, she also continues to work as a butler and develops butler concepts for private households.

8 Vontobel blue Theme

What is the secret being a perfect butler?

The prerequisite for assuring perfect service is something called the “butler interview”. When I start to work for someone, I’ll run through a series of questions with that person. For example, I will ask what the client prefers for breakfast, what mineral water he drinks, what appointments are pending, and where he wishes to receive visitors. I ask very nuanced questions and clarify the client’s needs in detail. It is also common to agree on signals that the client can give you to express his or her wishes, for example in a meeting or at a reception, without needing to express them directly. For instance, a signal may mean it’s time for a meeting to take a break, or it may simply be a request for a glass of water. These signs are very important for a butler, because he demonstrates his qualities best when he knows what his client is wishing.

Butlers are commonly seen as models of perfect etiquette.

What does etiquette mean to you personally?

Etiquette means a lot to me. I love good manners. But the art of etiquette means that you can feel at what moment etiquette is required. There is a great example of this told about Queen

Elizabeth, which is emblematic of her graciousness. At a state dinner, one of the guests, a politician, mistakenly drank a sip of water from his finger bowl. Now this is not there to drink from; it’s meant for dipping your fingers into after eating fruit or chicken. Queen Elizabeth noticed his mistake and immediately did exactly the same thing: she took her finger bowl and drank from it.

The other guests followed her example. Of course, drinking from your finger bowl is a true gaffe, but what would have been even worse would have been if the Queen had somehow sent a signal to her guest that he had made an embarrassing mistake.

everything, hand out assignments, and never need to have any direct client contact any more. Everyone serves someone – be it your employees, clients, superiors or members of your own family. You cannot avoid serving others. After all, one reason why a top manager is a top manager is because he has empathy for what his customers are experiencing on the sales front. So he is serving the customers, just as much as the other members of the staff are. He must never lose contact with the front line, because at the end of the day, that is where the moment of truth is experienced.

“But the art of etiquette means

that you can feel at what moment etiquette is required.”

Classic butlers not only serve, but manage large households. Is that not contrary to serving?

Delegating and serving complement each other very well. It’s completely wrong to think that you could just delegate

Vontobel blue Theme 9

2.053 bil.

CHF was the total revenue generated by organically produced and processed goods in Switzerland in 2013, according to Bio Suisse. The year-on-year growth rate of about 12.1% underscores the population’s increasing trust in “Bio” foods.

68%

of Europeans

7

Since the

century,

trust the Swiss the most among all the nationalities proposed, according to a “Reader’s Digest” poll. Switzerland shared top honours with Sweden.

th

people have trusted the forecasts of card readers. From its origins in China, card reading has spread out into the whole world.

96.6% of Germans trust firefighters.

On the other hand, only 15.1% trust politicians.

2

3 of the population in Switzerland are convinced that e-banking is safe.

10 Vontobel blue Theme

350

Around blind people

in Switzerland are able to move more freely thanks to their guide dogs.

85

“Guide Michelin” testers are on the road, traveling throughout Europe rating restaurants. Gourmets from all over the world trust the Michelin stars these testers confer on the continent’s top dining establishments.

3 bil.

More than air passengers boarded a plane in 2013, putting their trust in the pilots.

between

10 and 15 dogs out for a walk. Pets, and especially dogs, are greatly valued in Buenos Aires, and accordingly, dog sitters are considered as providers of a highly appreciated service.

Toyota drivers recommend the brand to others.

This is the highest ranking of all car brands in a Swiss survey on trust in brands.

Photos: Shutterstock, Thinkstock, Getty

Every day, each one of the more than 600 registered “Pasaderos de perros” (dog sitters) in Buenos Aires takes

87% of Switzerland’s

Theme

When delegating saves lives.

Text: Patrick Preuss // Photo: Ethan Hill

In order to provide assistance as efficiently as possible, UNICEF coordinates an array of necessary tasks with collaborators around the world, based on a clearly defined process. By assigning responsibilities to individuals all along this process chain, UNICEF ensures that challenges are addressed quickly, and that everyone involved can concentrate on his core competencies. An important reason why this system is a success is the trust in a clear and efficient division of labor.

Clean water, adequate food, access to education and medical care – all these things we simply take for granted. And even if an emergency occurs, we know that help is close at hand. But what we assume will be there for us day in, day out, is far from being a “given” for people living in many countries. Above all, this is the case for children, who are especially vulnerable to the risks of suffering when living conditions are bad. That is why UNICEF, the United Nations Children’s Fund, has as its primary objective to advocate for the protection of children’s rights, to help meet their basic needs and to expand their opportunities to reach their full potential. It is a challenging and multi-faceted mission, which is why UNICEF implements numerous programmes in such areas child survival and development, basic education and gender equality, and child protection. On top of these projects comes the humanitarian assistance that it provides in response to crises taking place around the world.

Centralise know-how, delegate competencies In 2013 alone, UNICEF responded to 289 humanitarian situations in 89 different countries. It is a tremendous planning and logistical feat – not only to coordinate the efforts of all of the collaborators involved in these projects, but also to ensure that crucial supplies are rapidly stocked and shipped when emergencies strike. One key to success lies in the UNICEF approach, which involves national, regional and global collaboration, with experience sharing and technical assistance carried out across all three levels. “Thanks to a unique global deployment mechanism, we are able to respond very quickly to events,” explains Silvia Danailov. The 40-year-old Swiss native has worked for UNICEF since 2001, and today is responsible for coordinating interventions in acute crises. As Chief Humanitarian Field Sup12 Vontobel blue Theme

port Section, she has most recently been involved in coordinating the response to the emergencies in Syria, South Sudan, the Central African Republic and Iraq. “Specialised units each assume responsibility for a sector, such as water or education, contributing their expertise to a holistic and coordinated response.

This allows everyone to focus on his core competencies, so we can quickly get results at the field level.”

“When I started to work for UNICEF,” she says, explaining her motivation, “a dream came true for me. Here I can take over responsibility and engage myself within an international organization for the rights of the children.”

Silvia Danailov has worked at UNICEF since 2001. She began her career with the Children’s Fund as a staff member in the Department of Humanitarian Policy and Advocacy. From 2002 to 2012, the Swiss native worked in Somalia, the Democratic Republic of Congo, Burma, Laos and Haiti, among others. In these countries, she led programmes and relief efforts, managing teams of up to 50 collaborators. She is currently the chief of the Humanitarian Field Support Section in UNICEF Headquarters in NY, leading a team that coordinates UNICEF’s response to major humanitarian crises, as well as focuses on emergency preparedness and early recovery. Before Ms. Danailov took up her work with UNICEF, she worked in Switzerland’s Ministry of Foreign Affairs as a human rights expert, as well as in various non-governmental organizations and the academia.

© Unicef

1 2

At the heart of the international network are UNICEF’s country offices – the first point of contact when a crisis occurs and the source of immediate response to emergency needs. When necessary, UNICEF’s regional offices also provide support. They are responsible, together with UNICEF’s staff based at global level, partner organisations and local collaborators, for the implementation of projects and relief efforts in the affected regions.

“I have worked for more than thirteen years with UNICEF in many different countries,” says Danailov, “and I have learned tremendously from each experience. My first field deployment was to Somalia, where I helped set up the UNICEF child protection programme. I had to recruit national staff members and set up programmes addressing many sensitive and challenging issues. It wasn’t easy to speak about these issues in the context of Somalia, in particular as an outsider and a woman. For example, we led programmes to help children that were involved in the conflict as child soldiers. Talking to those children – who have seen things that no child should see – it was not always easy to manage one's emotions,” Danailov recalls. Before she assumed her current position in New York, she was also assigned to lead programmes in the Democratic Republic of Congo, Burma, Laos and Haiti.

© Panos

International teamwork Country offices, with both international and national staff members, are supported by Headquarters staff in New York, Geneva and Copenhagen, as well as by regional advisors who are positioned in seven strategic locations throughout the world. The knowledge and lessons learned, gained at the country level, inform UNICEF’s global strategies and the design and implementation of programmes in the field. The delivery of materials and supplies is organized centrally. From the logistics centre in Copenhagen and supply distribution centres in Panama and Dubai, UNICEF can quickly provide assistance anywhere in the world.

3

While the implementation of humanitarian response is the responsibility of the UNICEF country offices, UNICEF’s Office of Emergency Programmes (EMOPS) provides crucial coordination. The New York-based UNICEF staff offers strategic support to ensure that country offices have the necessary means and resources.

1 By delegating tasks to the respective experts, the activities are so interlocked that despite the geographical length of this process chain, assistance can be provided quite efficiently.

2 From the logistics centre in Copenhagen and supply distribution centres in Panama and Dubai, UNICEF can quickly deliver material anywhere in the world.

© Panos

3 Immediate emergency assistance is just one aspect of UNICEF’s activities

14 Vontobel blue Theme

in the countries and regions. The organization also supervises numerous longer term development programmes, and supports various ongoing initiatives at local level.

Silvia Danailov herself is leading the Humanitarian Field Support Section (HFSS). “This part of the organization is a first port-ofcall for UNICEF country offices facing a large scale of emergencies requiring organization of wide mobilization,” she says. “No matter what support they need, we help to coordinate the needed assistance from the headquarter divisions. Working at the global level now, I can use my solid field experience and competencies to support global programmes as well as to advise and guide our colleagues in the field.”

The Emergency Response Team, attached to the HFSS, provides support if additional staffing is required at the field level when UNICEF teams are facing major emergencies. “During a crisis,” says Danailov, recalling her time as head of an Emergency Response Team in the Democratic Republic of Congo, “all the divisions are coordinating and joining efforts on a permanent basis.

You have to give an overview and provide the necessary information to ensure that UNICEF’s humanitarian action is effective, timely and efficient – not only within the field based teams, but also with the regional offices, and the specialists in New York. During these hectic times it is important that you can trust each other and that everybody is reliably fulfilling the responsibilities he has been delegated and is accountable for.”

Open a newspaper or turn on the news these days, and you will learn a lot about the work of aid agencies in crisis regions. But immediate emergency assistance is just one aspect of UNICEF’s activities in the countries and regions. The organization also supervises numerous longer term development programmes, and supports various ongoing initiatives at local level. “UNICEF’s focus can be described as a continuum between development programming and humanitarian assistance. It’s just that the current crises get more attention from the media,” says Danailov. By means of the various ongoing programmes, UNICEF aims to achieve a sustainable change in the lives of disadvantaged children. “Working for a longer period in a country, you can see the improvements the programmes provide. But to be able to help, you have to build up the trust of the local authorities and the populations you are serving. Only if everybody works hand in hand, change becomes possible,” she says. “During my time in Laos, for example, we implemented a great number of programmes together with the local authorities and partners.

Some of them aimed to improve the situation immediately.

Others had an impact on the longer term, as they addressed changes of behaviour and attitudes towards children’s rights, which doesn’t happen immediately. Education for all, in particular girls, is one of the best ways to bring about lasting change and empower those we are assisting.”

“To be able to help, you have to build up the

trust of the local authorities and populations.”

Emergency assistance is more spectacular In order to remain informed at all times of important developments, the UNICEF Operation Centre (OPSCEN) gathers and disseminates information from around the world 24 hours a day, seven days a week. After an event, OPSCEN which is located within the Office of Emergency Programmes with UNICEF NY, makes immediate contact with the respective country office in order to obtain first-hand information. Based on this information, UNICEF senior staff agrees on the best course of action and the internal mobilization required to respond to the emergency. As Senior Recovery Advisor, Silvia Danailov has applied the lessons learned in previous crises to emergencies taking place today. For example, the response to Typhoon Haiyan in the Philippines was informed in part by experiences of the 2010 Haiti earthquake. “It is very encouraging to see how fast we are able to get assistance delivered in an emergency. As an example, within two days after the Typhoon Haiyan hit the Philippines at the end of 2013, UNICEF had shipped 10,000 tarpaulins, 4,600 water containers, 5.5 million water purification tablets, 556,000 oral rehydration sachets, 21 GPS receivers, 2 portable warehouses, tents, trauma kits and water tanks. These supplies covered the needs of about 10,000 families,” she says, highlighting the interplay of country offices, the central departments and logistics during emergencies.

Everybody is responsible With their strategy of establishing a systematic process between the operatives on the ground, country offices, regional offices, supply hubs and headquarters, each collaborator is a vital part of the enterprise as a whole. By delegating tasks to the respective experts, the activities are so interlocked that despite the geographical length of this process chain, assistance can be provided quite efficiently. “The international community is faced with increasingly complex humanitarian crises,” says Danailov, “but even though we are sometimes separated from each other by thousands of miles, the system works perfectly. The principle of core competencies, delegation and trust – as well as clear accountabilities across the organisation – enables each individual to do his or her best to protect and assist the children around the world.” She adds: “Twenty-four hours a day is not enough to fulfill all our objectives. The challenge is therefore to be able to provide effective, efficient and timely support to our colleagues working on the front lines so they can respond to all the various emergencies and, working together with partners, achieve results for the most vulnerable children.”

Vontobel blue Theme 15

Theme

Relying on the potential of the masses.

Text: Marlies Keck

Crowds can be smarter than individuals. Based on this sociological theory of swarm intelligence – the so-called wisdom of crowds – an economic application soon emerged: crowdsourcing. According to this principle, companies outsource partial tasks to a group of volunteer users over the Internet and thus capitalise on the enormous potential of the masses.

The Internet and the social networks active within it allow companies to establish an ever closer dialogue with their customers.

This can also affect, not least, their internal processes. Companies that want to fully exploit this proximity to the customers can engage them, for example, right at the point of product development and innovation management via “crowdsourcing”.

In general, this methodology can be defined as the outsourcing of certain tasks to an undefined “crowd” or group of people through an open call on the Internet.

Today, it’s possible to distinguish between several types of crowdsourcing. In “crowdvoting”, for example, a community is called on to give feedback, support, opinions or recommendations on a particular subject or issue. In “crowdcreation”, the participants work together to develop, inprove, or create targeted ideas, designs and concepts, along the lines of the slogan “together we are strong”.

real market needs may be brought to the attention of a company, which can obtain innovative ideas and solutions directly from its customers.

Mass-produced product development In product development, so-called “configurators” are used – i.e. tools that allow customers, making use of predefined elements, to individually assemble the product as they would like to see it. Chocolate, cars, furniture, handbags, and even cereal mixes have all been “built” in accordance with this principle of mass customisation. One important aspect of a crowdsourcing campaign is to be able to use the information about which configurators are put to use, and how, in order to make viable decisions regarding eventual mass production. The idea is to bring together all the aspects of the product desired by the individual participants in the process into a single end design that is marketable, producible and has a decent chance of success.

Both, the participants and the manufacturer, should be able to recognise their inputs in the final product. The list of companies that have made use of configurators for crowdsourcing processes in the last few years is quite long, because the high degree of standardisation enables a large number of product ideas to be generated. For example, the British foods brand Walkers demonstrated this very impressively with their crowdsourcing campaign “Do us a flavour”. Within six weeks, more than 1.2 million suggestions were received for new potato chip flavours.

“...The world is becoming too

In both of these cases, the basic idea revolves around the execution of a given task by a virtual community on the Internet. Most of these tasks, referred to as “microjobs” or “clickwork”, are solved virtually, i.e. on the Internet, via a computer or smartphone. In this way, the community, working within a clearly defined framework, generates an extremely wide range of value-added inputs for the person or company mandating the assignment. The benefits of crowdcreation are obvious: By dismantling the work into (tiny) subtasks, results come in faster and can be processed faster, while at the same time the overall project may enjoy greater market acceptance thanks to the advance participation of potential customers. With crowdvoting,

fast, too complex and too net-

worked for any company to have all the answers inside.”

16 Vontobel blue Theme

Especially in product management, crowdsourcing represents an attractive approach for developing innovations. Nevertheless,

© Shutterstock

Crowdsourcing – the masses are no longer merely consumers, but a resource for new ideas.

Terminology

certain reservations should be kept in mind when it comes to this open innovation approach. Some business owners are reluctant to work with external players, not wanting to open the corporate gates to outsiders. They fear loss of control, as well as the potential outflow of company expertise. The following negative examples illustrate this rejection: a certain retailer initiated a crowdsourcing campaign that prompted the company to introduce a new detergent that smelled like fried chicken. On another occasion, a new air freshener was proposed that would give off the smell of minced pork. In both of these cases, the companies – imprudently – promised that the result of the crowdsourcing effort would be implemented. Such instances of “crowdslapping” (the name given to the abuse of crowdsourced projects) are now considered good learning examples showing how important it is to define the project and its tasks very precisely.

Crowdsourcing: Overall, crowdsourcing refers to the outsourcing of certain tasks by a company or an institution to an undefined group of people through an open call, which usually takes place over the Internet.

Using swarm-financing to get projects on their feet The most well-known sub-form of crowdsourcing is “crowdfunding”. This activity does not focus on the aggregation of knowledge, opinions or creativity, but rather has as its goal the generation of capital. But, just as with crowdcreation, where the overall goal is achieved by completing many small subtasks online, in the case of crowdfunding, the desired total amount of funds to be raised is reached through many small individual investments paid in by members of the community. Depending on the type of crowdfunding, the consideration offered in return may be monetary (e.g. in the form of profit sharing) or non-monetary (e.g. in the form of recognition). The projects financed through this mechanism are quite varied; on the numerous crowdfunding platforms it is possible to find a wide range of events, films, technology projects, books and many other ideas hoping to be financed.

Paradigm shift No matter how and in what form the crowd is integrated via the Internet, renowned scientists believe that the principles of open innovation and crowdsourcing are important components of a fundamental paradigm shift. Yochai Benkler, a professor at Harvard Law School and author of “The Wealth of Networks”, says for example, “… the world is becoming too fast, too complex and too networked for any company to have all the answers inside.” Companies should therefore adapt to dynamically changing customer needs, actively communicating and collaborating with them eye-to-eye as partners. More and more organisations are realising this, no longer describing their customer in the digital age as “king”, but as “emperor”. Who could possibly know better what customers want than the customers themselves?

And – unlike in the past – via the Internet, they actually get a direct answer to this question.

Crowdvoting: Crowdvoting aims to ascertain the opinion and judgment of the crowd, in order to evaluate ideas or contents. These opinions, received in this structured way, then form the basis for a decision. Crowdvoting can be used as a forecasting tool, for example.

Crowdcreation: The objective of crowdcreation is to make use of the creative potential of a crowd. The collected ideas emanating from the community might be applied in the form of texts, audio files or graphics.

Crowdfunding: Here, too, the use of the Internet and the crowd is key. However, as opposed to the categories mentioned above, it is not the knowledge and creative potential of the crowd that is sought, but the possibility of raising capital for projects of all kinds.

Vontobel blue Theme 17

Macro

Euro zone has emerged stronger from the crisis, in spite of all the doomsayers.

Text: Christophe Bernard, Chief Strategist Vontobel, and Dr. Walter Metzler, Senior Economist

The advance of the EU sceptics in the European Parliament elections in May paints a picture of an increasingly politically divided Europe. Nevertheless, many indications are pointing to a convergence of the economies within the Euro area. In addition, the economy is in an uptrend, and although it may be as weak as before, it has already had a positive impact on the labour market.

Paraphrasing a famous quote from the American humourist Mark Twain, fears of the death of the Euro – in the air for four years now – have been greatly exaggerated. The single currency has indeed been saved, yet nonetheless, many investors remain very insecure regarding the further prospects for the European Monetary Union (EMU). So the question looms whether a relapse into an acute crisis might still be possible at any time, bringing with it wild fluctuations in the bond and equity markets and a renewed slump in economic activity. In addition, the future trend of inflation – or the lack of it – is also cause for concern: could the Euro zone slip into deflation, or could an excessively generous monetary policy soon bring about a catastrophic surge in inflation?

Strengthened institutional framework As far as the management of the crisis is concerned, the emergency programmes that were hectically and dramatically cobbled together for Greece, Ireland and Portugal are still fresh memories. But what is almost forgotten is that in the past four years, the European Union has undertaken significant reforms of its economic governance institutions. Occupying a central role in all this is the fiscal pact, under the terms of which 25 EU countries have introduced debt brakes into their national laws. Concretely, this means that the cyclically-adjusted budget deficit may not exceed 0.5 percent of a country’s gross domestic product (GDP). Additional new rules governing fiscal policy point the way to a timely path for the reduction of debt to 60 percent of GDP. These requirements are complemented by the threat of stringent sanctions and firmer decision-making mechanisms.

And when it comes to anti-crisis measures – should they be needed again – a more systematic approach should be pos18 Vontobel blue Macro

sible in the future. On the one hand is the support provided by the European Stability Mechanism (ESM), which can assist countries with financing difficulties by making loans available; on the other hand is the commitment of the European Central Bank (ECB) to engage if necessary in unlimited intervention in order to prevent unjustified interest rate swings in individual Euro area countries by means of so-called Outright Monetary Transactions (OMT). Both the ESM programmes and the OMT interventions presuppose that a country applying for assistance

is complying with the rules of the fiscal pact. In this sense, these rules gain even more gravitas.

Š Thinkstock

Banking union as a capstone The fourth cornerstone of the strengthened institutional architecture, the European banking union, is on the verge of realisation. This consists essentially of a uniform supervisory banking authority (Single Supervisory Mechanism) and a uniform settlement regime (Single Resolution Mechanism), both under the aegis of the ECB. One of the central objectives of the banking union is to break the vicious circle of rising interest rates on government bonds and shaky bank balance sheets, resulting in a crisis of confidence. This happens because, with higher interest rates, banks see their mostly large holdings of government bonds lose value. As a consequence, as interest rates continue to rise, so too does the risk that the state will have to bail the

banks out. Finally, the banking union also mandates the obligatory inclusion of bondholders in the rescue of banks; this stipulation is meant to take some pressure off the public finances.

In addition to the public finances, when the Euro crisis hit, the foreign trade deficits of the so-called periphery countries also proved to be an explosive factor. However, thanks to increasing competitiveness and lower imports, several countries have achieved an impressive improvement in this respect.

The convergence of economic performance and institutional reforms has helped to make the Euro zone less heterogeneous today and thus more resistant to crisis. Conspicuous has been the reduction of the internal stresses at the narrowing of interest rate differentials between the core and peripheral countries, which have fallen back to the level at the start of the Euro crisis.

This decline in interest rates supported the recovery of both the economy and the equity markets. Despite this progress towards more stability in fiscal policy and the financial system, the Euro zone is still far from a fiscal or political union.

A more active European Central Bank Given the weak economic growth and stubbornly high unemployment, inflation in the Euro zone is significantly less than the target (just below 2 percent), despite record-low interest rates.

With its package of measures to further ease monetary policy in early June, the ECB has confirmed its willingness to prevent lengthy or even only creeping deflation and, if necessary, to take decisive and unconventional measures. This willingness should also help to weaken the Euro, especially since the United States is working to streamline its monetary policy. A weaker currency will provide added support to the upswing. In this environment, therefore, European equities remain a preferred asset.

Vontobel blue Macro 19

Competence

A question of trust.

Text: Jean-Pierre Stillhart, Head of Private Banking Switzerland, Vontobel Private Banking

Managing assets can be compared with tending a large garden.

Because of the complexity and the enormous variety of possibilities, it is necessary to deepen your know-how of all the issues involved.

If you are not a gardener, getting up to speed requires a greater effort.

If you want to create such a garden project without outside help, then depending on how big your garden is, and on your expectations for it, looking after it quickly becomes a full-time activity.

Happily, there are professionals to help you plant and maintain a garden, just as there are professionals in asset management.

They take over all, or a defined part, of the responsibility and thus remove a burden from the owner. A thorough analysis of the current situation and of the development of the objectives is critical, and so is the ongoing monitoring of these two tasks.

It takes a widely experienced Client Advisor, a structured process, and versatile, flexible solutions on the part of the bank so that the client is assured of the customised asset management solution that meets his expectations and wishes.

The challenges Due to the complexity of the financial markets, asset management is hugely challenging. Trading on a daily basis, sometimes even around the clock, makes monitoring the market and the many factors influencing it a wide-reaching task. It is not only the quantity of data that complicates the analysis for the investor, but also how they are interrelated. Access to modern information and analysis opportunities, whether on the Internet or via a terminal at home, can never replace the exchange of information with other experts. This is the advantage of professional analysts who are working in financial institutions. Every day, they focus on their special areas of expertise and regularly exchange information with colleagues. They are supported by modern analytical software, portfolio management and risk management systems. All this creates a more comprehensive picture of the market, making it much easier to recognise market opportunities – even global ones.

As a client, it is possible to benefit from this expert know-how by means of an asset management mandate. However, before 20 Vontobel blue Competence

Jean-Pierre Stillhart is Head of Private Banking Switzerland.

handing over management to the experts, a thorough analysis of the initial situation is needed. In addition to understanding the structure of the assets, it is important to become familiar with the client’s family situation, his requirements and objectives. Is financial security the primary goal, or does the client already have concrete plans, such as financing the education of his children? How long is the investment horizon, and how much risk is acceptable when investing the money? What riskto-return relationship is desired? To thoroughly and comprehensively answer these questions, the Client Advisor is the right partner. The combination of a structured process, networked thinking and years of experience forms the basis for the evaluation of the objectives and possibilities as well as the determination of the client’s risk profile.

Š Shutterstock

©©Shutterstock Shutterstock

In order to optimally align the solution to the client’s needs, it is important as well to clarify the following questions: How much does the client want to be involved in making ongoing decisions? How much experience and interest does he have in the financial markets? How pronounced is his need for information – in general, or in the case of unforeseen developments in the portfolio? From the answers to these questions, an indication emerges of how involved the client wants to be in the management of his assets.

If the client is only pursuing a single goal, then a solution is probably possible, and sensible, within a single mandate. Often, however, one has several objectives – and they should even be achieved at different stages of life. This is hardly to be accomplished with a single mandate. Accordingly, an individual solution is possible by combining various mandates together in order to reflect the specific needs and requirements of the client.

Take as an example a client who primarily wants to protect his assets for his retirement, building them up over the long term; however, he would also like to invest a certain part in somewhat riskier assets. He has already gained some investing experience and has the relevant knowledge of the financial markets. However, he does not want to spend too much time managing his assets and also doesn’t believe he needs to be involved in all the investment decisions. In such a case, two different mandates would be put together for him. The main component would be an asset management mandate for the long-term investment, suitable for the risk profile of his retirement objective. For the part of his assets for which he wants to use his own expertise and take on 22 Vontobel blue Competence

greater risk, an investment advisory mandate could then be the right supplement. With this mandate, he receives the information that he needs to make his own decisions.

Asset management mandates are usually the central element in the professional management of assets. With a mandate, the client takes advantage of the expertise of the specialists and yet retains control over his assets. In contrast to investment advisory, investment suggestions are not made, but rather the asset manager takes over the actual responsibility for the investment decisions himself. He optimises and maintains the investments in accordance with the asset goals specified by the client. Here, aspects such as personal values are considered.

This means that such a mandate has much more individuality than is generally assumed.

The advantages There are strong arguments in favour of delegating the management of one’s assets to a professional partner. By trusting in a partner who grapples every day with the complex financial markets and the flood of information, the client liberates himself to do other things. He gains time for his family, his business or even for his hobbies. The investment expert monitors and analyses the market situation for him. By working with specialists, he also has constant access to additional expertise that provides broad support for his decisions on behalf of the client. Modern IT systems continuously monitor the portfolio based on the benchmarks that have been defined. The optimal fulfillment of the investment objectives is ensured. The Client Advisor is the interface between the investment expertise of the bank and the client’s needs. Be-

cause they have been in close personal contact, the possibility arises that, together, they can identify changes in the client’s circumstances early and evaluate possible changes in investment objectives. The corresponding realignment of the assets is then decided on together. This is what a client should expect from a forward-looking bank.

In modern asset management, transparent reporting is a matter of course. At all times, the client must have the possibility of gaining a current overview of how the portfolio has been developing. This also includes an assessment of the overall risks. An experienced partner knows that this reassures the client and justifies his trust: the client can rest easy.

den, but has no clue how to ensure it will survive a harsh winter or a scorching summer? Experienced asset managers can advise clients in this regard and put together the mandates according to their needs. Individualising the wealth management solutions to a high degree, and offering a wide range of mandates, such as those offered by Vontobel at many of its offices around the world, are the basis for the clients: their individual needs are covered as well as their growing demand for customised solutions. And the client receives support from the expertise of our investment professionals and research analysts.

Transparency is an important pillar of the client’s trust in his asset managers. This includes a comprehensible and structured investment process with system-based portfolio monitoring. In this way, certain risks can be managed. Clear and understandable fee models are also part of this transparency. Whenever possible, these should also be free of retrocessions, i.e. no fees should be charged to the client which he is not aware of. Clear, periodic reporting on the performance of the portfolio is also an important foundation for a trusting partnership.

“As with the aforemen-

tioned care of a garden, in asset management one

Selection For the design of the investment, many choices are available to the Client Advisor today, allowing him to respond to the individual circumstances and wishes of the client. Because of this, even more mandates can be put together, each one aligned to specific goals and needs.

also needs an experienced partner at one’s side.”

A classic asset management mandate is composed of several asset classes such as cash, bonds, equities, commodities, precious metals and alternative investments. By broadly diversifying the investments, risks are minimised. Focused mandates also exist, which invest in just one asset class and/or region. They can be used for specific client needs and implemented individually. For example, if a client wants to manage his portfolio himself, but has little experience of managing investments in bonds, then he can have the bonds managed in an asset management mandate and look after the rest of the asset classes himself. Or if a client wants to benefit from the specific expertise of the bank in Swiss equities, he has the opportunity to invest in a mandate with a Swiss equities focus. In these cases, the client benefits in a tailored way from the expertise of specialists.

You can only gain more freedom by delegating if you trust the person who takes over responsibility. This is why it is important to take enough time to decide in advance what you want to delegate and how the division of tasks should look. Only then should you start to consider offers. If these proposals only consist of written text, they are not really a sufficient basis for such a personal decision. More extensive investigation – such as personal conversations with the Client Advisor and getting to know the institution with its culture and available know-how – are important foundations for building a long-term and trusting partnership.

Experience Building up and managing assets requires long-term planning.

As with the aforementioned care of a garden, in asset management one also needs an experienced partner at one’s side.

Because what good is a gardener who can plant a beautiful gar-

Vontobel blue Competence 23

Competence

A wide range of trading possibilities – Vontobel has the know-how.

Text: Peter Camenzind, Head of Transaction Banking, Vontobel Investment Banking

NestlĂŠ, Novartis, Roche and many other Swiss companies are traded not only on the Swiss Exchange. Alternative trading venues make up well over 35 percent of the market today. These new trading possibilities present a challenge to banks. Bank Vontobel AG recognised these challenges early, and invested in the future. Today, we are successfully offering our trading

Š Shutterstock

services to other banks and financial institutions in Switzerland.

24 Vontobel blue Competence

What does the client expect from his bank when he asks it to buy or sell certain securities on the international trading platforms? Have client needs in this respect changed dramatically in recent years? Hardly. As has always been the case, the client is entitled to assume that the bank will buy or sell the securities at the best possible trading price. In spite of this legitimate expectation – one that has not changed much over the last few years – securities trading itself has become much more complex than it was in the past.

With the introduction of the MiFID (Markets in Financial Instruments Directive), an EU directive on the harmonisation of the financial markets in the European internal market, a development has taken place in Europe which had already come to pass in the United States a few years previously: with the evolution of alternative trading centres for securities, the stock exchanges in the classical sense are losing their monopoly. From the point of view of the banks, this fragmentation of liquidity across a growing number of trading platforms means that an additional layer of complexity in the execution of client orders must be dealt with. In order to trade Nestlé at the best price, merely having access to the Swiss Stock Exchange is no longer sufficient.

BATS, Chi-X and Dark Pools The alternative trading venues are called BATS, Chi-X or Turquoise. On any given trading day, they account for no less than 25–35% of the total liquidity in the large-cap Swiss equities, and for the same proportion of total DAX volume.

Besides these stock exchanges and alternative trading venues, so-called “dark pools” are also vying for the favour of investors. These liquidity pools are called “dark” because participants are treated anonymously, receiving no insight about the order books of other traders, i.e. their open securities orders. This feature is designed to prevent price fluctuations in the case of large orders, and thus enable large sales at a stable price. Dark pools now also account for a significant volume of securities sales and have thus become an important additional trading venue.

Light in the darkness When it comes to investing, this growing number of possible transaction venues makes it difficult to make the best choice of stock exchange. A good banking partner can shed valuable light into this darkness.

In order to meet client requirements, the bank must be able to always find the best price in an ever-increasing number of market venues. It is no longer sufficient, for example, to place a buy order for shares at the main exchange. If the bank wants to achieve the best overall result for the client, it must have access, on the client’s behalf, to these new markets as well. But merely having market access doesn’t mean that getting the optimal price is a sure thing. So highly complex algorithms are developed to check within a fraction of a millisecond which market has the best price – and to make the purchase or sale on the spot, before someone else does. There may be many trading centres, but for your securities order, there is only one best transaction.

The client has the choice Essentially, if Bank Vontobel buys Nestlé shares for its clients, they can make the purchase where the best price is available.

However, the client can decide himself which stock exchanges are to be taken into account for his orders. The wider the range, the more advantageous the execution.

We have invested in the future and offer our clients not only comprehensive and rapid access to 61 different markets around the globe, but also the security, in a fast moving trading world, of always having the entire selection to choose from. What’s more, an appreciation of the quality of this service has been spreading: Bank Vontobel has become a major provider of trading services for financial institutions in Switzerland.

Anyone who is unable to offer their clients access to this liquidity is clearly at a disadvantage with regard to the quality of their securities execution.

Vontobel blue Competence 25

Blue Page

News from Vontobel.

Vontobel is a theme sponsor of the LUCERNE FESTIVAL, summer 2014 As if by magic, music evokes our emotions. As listeners, we experience all the moods of the composer – anxieties and fears, but also joy, confidence and hope. Music touches us at a very profound level. To delve deeper into this universe of feelings, the programme of this summer's LUCERNE FESTIVAL has chosen “Psyche” as its theme. Gathered under this banner, the festival’s artists and orchestras will explore music as a true mirror of the stirrings of the soul.

Vontobel is supporting the LUCERNE FESTIVAL as a theme sponsor. We are looking forward to many emotional moments – passages that will move and animate us as listeners, and hark back to the original sense of psyche.

Recognised as the “Best Private Bank” in Switzerland in 2014 For the sixth time, the Swiss business magazine BILANZ put the private banking services of a number of Swiss banks to the test, soliciting an offer from several dozen institutions to manage the assets of an actual client. Investment proposals were initially requested from a total of 78 banks, 18 of which passed the preliminary round. In the end, an independent jury selected just six banks as winners in four categories.

We are proud to have been awarded first place, with the recognition as “Best Private Bank”. Jean-Pierre Stillhart, Head of Private Banking Switzerland, regards this award as an acknowledgment of Vontobel’s quality promise, and our ability to respond to client needs with individually tailored solutions, providing them with forward-looking advice and an array of state-of-the-art financial products. Moreover, it is very imporPrivate Banks Private-Banking-Rating tant to us, and our overarching goal, 2014 to protect and if possible to increase the assets entrusted to us.

1.

© LUCERNE FESTIVAL

Launch of cooperation between ANZ and Vontobel In November 2013, Australia and New Zealand Banking Group Limited (ANZ) and Vontobel signed a cooperation agreement based on a long-term strategic alliance. As part of the cooperation strategy, Vontobel Asset Management will manage ANZ’s “active” global equities segment, as well as bring its expertise in the areas of global asset allocation and best practice in private banking to the table. Through this alliance Vontobel is expanding its presence in the Asia-Pacific region, especially in the growth markets of Australia, New Zealand, Hong Kong and Singapore, thereby significantly raising its profile in this region as a global active asset manager.

26 Vontobel blue Blue Page

The respective CEOs Joyce Phillips and Zeno Staub launched the cooperation with a joint media and a ANZ employee conference held in Sydney, Australia, this May 28th.

Our locations Switzerland Zurich Bank Vontobel AG, Gotthardstrasse 43 CH-8022 Zurich, Telephone +41 (0)58 283 71 11 Vontobel Swiss Wealth Advisors AG, Tödistrasse 17 CH-8022 Zurich, Telephone +41 (0)44 287 81 11 Basle Bank Vontobel AG, St. Alban-Anlage 58 CH-4052 Basle, Telephone +41 (0)58 283 21 11 Berne Bank Vontobel AG, Spitalgasse 40 CH-3011 Berne, Telephone +41 (0)58 283 22 11 Geneva Banque Vontobel SA, Rue du Rhône 31 CH-1204 Geneva, Telephone +41 (0)58 283 25 00 Vontobel Swiss Wealth Advisors SA, Rue du Rhône 31 CH-1204 Geneva, Telephone +41 (0)22 809 81 51 Lucerne Bank Vontobel AG, Schweizerhofquai 3a

Masthead

CH-6002 Lucerne, Telephone +41 (0)58 283 27 11

Editor

Germany

Marketing Private Banking (W. Käser)

Frankfurt on the Main

Gotthardstrasse 43, CH-8022 Zurich

Bank Vontobel Europe AG, Frankfurt on the Main Branch

Telephone +41 (0)58 283 71 11

Bank Vontobel AG

WestendDuo, Bockenheimer Landstrasse 24 D-60323 Frankfurt on the Main, Telephone +49 (0)69 69 59 96 0

Contact blue@vontobel.com

Hamburg Bank Vontobel Europe AG, Hamburg Branch

Layout

Sudanhaus, Grosse Bäckerstrasse 13

Identica AG, Zug

D-20095 Hamburg, Telephone +49 (0)40 638 587 0 Printing Munich

Climate-neutral printing by Schellenberg Druck AG. Published

Bank Vontobel Europe AG, Alter Hof 5

four times per year in German and English. Reproduction, in

D-80331 Munich, Telephone +49 (0)89 411 890 0

part or in whole, is strictly prohibited without written permission from Bank Vontobel AG.

Liechtenstein Vaduz

Front cover: Getty Images

Bank Vontobel (Liechtenstein) AG, Pflugstrasse 20 FL-9490 Vaduz, Telephone +423 236 41 11

English version James Wade, Hurst & Freelancers

China Hong Kong Vontobel Wealth Management (Hong Kong) Ltd.

neutral Printed Matter

3601 Two International Finance Centre,

No. 01-12-802424 – www.myclimate.org © myclimate – The Climate Protection Partnership

8 Finance Street, Central, HK-Hong Kong Telephone +852 3655 3966

Disclaimer This brochure is for information purposes only and does not constitute an

USA

offer of any kind. The services described in this brochure are supplied under the

Dallas

agreement signed with the service recipient. The nature, scope and prices of

Vontobel Swiss Wealth Advisors AG Inc.

services and products may vary from one country to another and are subject to

Dallas Branch, 100 Crescent Court, 7th Floor

change without notice. Certain services and products are not available world-

Dallas, TX 75201, USA

wide or from all companies of the Vontobel Group. In addition, they may be

Telephone +1 214 459 3250

subject to legal restrictions in certain countries.

Bank Vontobel AG Gotthardstrasse 43 CH-8022 Zurich Telephone +41 (0)58 283 71 11 www.vontobel.com