Top 4 Pictet Wealth and Asset Management Interview Questions

Switzerland is synonymous with discrete private banking; from storing the deposits of the wealthy from around the world to providing them white-glove investment services.

While the wealth and asset management industries have globalized over the past few decades - with big American banks now holding the majority of assets under management - firms like Pictet have managed to grow to an incredibly large scale, with nearly a trillion in assets under management, all while still staying true to their Swiss roots. 

Pictet Wealth and Asset Management Interview Questions

Below are a sampling of some of the wealth and asset management interview questions you could expect from Pictet. These are primarily "market-based" questions, so the answers will shift over time due to the evolving macroeconomic environment.

Which asset class do you think is most sensitive to rates rising?

Why do you think so many got their inflation predictions wrong?

How would you talk to your clients if they're worried about volatile markets?

Why has the dollar strengthened so much relative to other currencies recently?

Which asset class do you think is most sensitive to rates rising?

While the Fed is on the most aggressive rate hiking path, the ECB has finally begun to follow in their footsteps as inflation begins to pick up within the Eurozone (and with nominal wages, unfortunately, not increasing alongside inflation).

Normally what you'd expect to see are equities being the most rate-sensitive. However, what we've observed over the prior two months is the rates and equities have suffered significant loses due to just how low the yields have been over the past few years and how sharp the reversal in rates expectations are. 

So, when answering this question, you want to make it clear to your interviewer that while you're aware that investment grade, high yield, and government bonds have all lost value over the past few months as yields have risen, equities are still what you would expect to be most rate-sensitive. 

In particular, the kinds of equities you'd expect to be hit hardest are those that are "growth stocks" because they're valued on the future free cash flows many years (or decades) into the future. However, when rates rise the discount rate at which future cash flows are discounted back to the present rises (thus making these future cash flows significantly less valuable today).

Why do you think so many got their inflation predictions wrong?

This is one of those kinds of questions that has no truly right or wrong answer. Instead, this is question is asked purely because your interviewer wants to hear how you think about a more nuanced topic. This is because a large part of the role of a wealth manager is just to talk to potential or current clients about the current market conditions. 

Backing up even just four or five months ago, the dominate narrative in markets was still that inflation was transitory (meaning that it'd be elevated for a year, at most, but then quickly fall back to around 2% a year). 

However, what wasn't recognized was that supply chain issues were perhaps a permanent feature moving forward, that a geopolitical shock would occur that significantly raised commodity prices, and that consumers would be willing to absorb higher costs. In other words, the expectation was for everything to normalize to roughly the situation of 2019 -- but this hasn't even begun to happen yet.

With that being said, within the ECB there are still those who think that most of the inflation we're seeing now is transitory. However, this is quickly becoming more of a minority view -- especially in light of inflation in the Euro-Area hitting a record and recent news around producer prices in places like Germany and Spain beginning to spike to record high levels (which will feed through to consumer prices in the months ahead). 

How would you talk to your clients if they're worried about volatile markets?

As mentioned in the prior question, talking to clients about market conditions and making sure they feel comfortable is an incredibly large part of being a wealth manager (less so with an asset manager, of course). 

When talking with clients, it's always best to be ready to present them with research either created by your firm or another firm placing the volatility in context. Further, you should always be prepared to talk in-depth about how you're positioning the client's portfolio, while keeping true to their desires, given the volatility in markets.

In the end, it's perfectly rationale to worry about volatile markets. The fact that they are volatile is because everyone is worried! But what you want to do is be able to show that even though no one has a crystal ball, you've given thought to where the markets are, understand roughly what's driving them, and have ensured that the client is being put into the best possible position (understanding that it's impossible to make money in all market conditions -- but you can try to diminish losses where possible). 

Why has the dollar strengthened so much relative to other currencies recently?

Over the past several months the dollar has strengthened against nearly every other major currency. In fact, in April of 2022 the dollar index rose by 4.5%, which is the best month that it has had in a decade. 

What this question is getting at is whether or not you know that interest rate disparities are one of the primary drivers of a currency's relative strength or weakness. So, because the Fed has forecast that they will aggressively raise rates this year, this has translated into the dollar gaining steam. 

The fact the Bank of England is moving slightly slower is why the US Dollar has strengthened against it (getting back to levels not seen since July of 2020). Further, because the ECB is moving much slower than the Bank of England or, of course, the Fed is why the Euro is the weakest against the dollar since nearly five years ago. In fact, some think there could be Euro/USD parity in the near future (although this would be quite unlikely and is not the consensus forecast right now). 

Conclusion

What Pictet is ultimately looking for - whether in a wealth or asset management role - are people who have a broad-based understanding of the markets, understand the role that they're applying for, and can communicate exceptionally well. 

Further, I'd add that while it's not a prerequisite to study the history of a firm like JP Morgan prior to interviewing - because no one will ask about it - you should anticipate that you may be asked the history, values, and philosophy of Pictet.

If you're looking for even more questions, I've put together even more wealth management interview questions and asset management interview questions in other posts (or there's also the wealth management interview guide). What we've gone over in this post are primarily market-based questions that are timely, so be sure to look at those other posts for more technical and behavioral questions.