Kaiser Partner on the LDF and how Tiny Liechtenstein Thinks Big - Spear's Magazine

Kaiser Partner on the LDF and how Tiny Liechtenstein Thinks Big

Size Isn’t Everything
 
  
From finance to sports, is there nothing Liechtenstein doesn’t punch above its weight in? Not according to Fritz Kaiser, says Sophie McBain

 
  
ONE OF THE
first things Fritz Kaiser says is that he’s not a banker. It’s an unexpected declaration from the chairman of Kaiser Partner, the Liechtenstein-based wealth management group and private bank. Thankfully, he elaborates: ‘You will not find the traditional banker in me. I’m an entrepreneur and investor, an adviser and good friend of wealth families, and a philanthropist.’

There cannot be many people who say they went into wealth management via martial arts. But it was when representing Liechtenstein at the 1976 Olympics that Kaiser met his first employer, Peter Ritter, a leading figure in the Liechtenstein trust business at the time. One of his first clients was the skier Hanni Wenzel, a fellow Liechtensteiner and Olympic gold medallist.

Fast forward 30 years — and a career that spanned setting up his own business, Fritz Kaiser Group, owning the Diners Club credit card business in Liechtenstein and Switzerland, and co-owning the Red Bull Sauber Formula One team — and Ritter and Kaiser became business partners, merging their firms to become Kaiser Ritter Partners until in 2010 Ritter retired and Kaiser bought out his stake.

Perhaps this unusual background has contributed towards his certain detachment when looking at the wealth management industry. ‘The world is changing fast and fundamentally, as never before in history. This requires changes to how wealth is managed, but the financial sector is trapped,’ he says. ‘The banks are trapped, because every quarter, you have to report your figures to show how good you are, and this system emerges where one just wants to show big figures. And people forget the client’s interest.’

The disastrous consequences of bankers’ chronic short-termism and myopic profit-chasing are hardly a revelation, but Kaiser’s observations are subtler. First, he is weary of large financial institutions, because it creates an environment where individuals ‘would rather be collectively wrong than individually right’ — it is easier to explain to a client that your investment strategy went wrong because of market conditions, and to be able to point to losses across the board at the bank, then to stick your neck out.

His second point is harder to pin down, because it’s embedded in his broader standpoint on wealth management. ‘Wealth preservation during fast-paced global change isn’t just about financial planning with accounts and profits, it’s a much bigger question,’ he explains. These questions concern wealth preservation in uncertain times, making assets work together in a sustainable way towards financial and life goals and finding privacy in an increasingly transparent world.

Kaiser Partner has been championing the cause of ‘responsible investing’, it even runs a blog on the topic, but Kaiser says that his first concern is business, not ethics. ‘I have my own ethical set of values of course, but responsible investment isn’t simply about ethical behaviour, it’s about smart investing and being on the right side of global change,’ he says. ‘I think that if you are very rich, it matters how you behave and how society looks at you. In such a climate of economic stress, rich people are advised to live in a way which is socially responsible. Because if you don’t understand your fellow human beings on the street, or you show your wealth in an unsympathetic way, it may well make others aggressive. So, socially responsible behaviour could well turn out as a kind of wealth insurance.’
 

Illustration by Vince Fraser   

THIS MIGHT SOUND very philosophical, but then he prides himself on thinking big and freely. Kaiser Partner employees eat together in the office’s restaurant (‘one of the best restaurants in Liechtenstein’) to encourage the free exchange of ideas over hors d’oeuvres. The company’s new Guide for Wealth Owners features whimsical illustrations and thinking points such as ‘to be good or not to be good, that is no longer the question’, ‘stakeholder value is the new shareholder value’ and ‘some build windmills, others build walls’.

A few years ago, Kaiser decided he wanted to compile a list of the ten most important drivers of global change. So he decided to talk to former US vice-president Al Gore, whom he met at Davos. Naturally. ‘So, I asked Al Gore, “Who do you think is the best futurist in the world?” And we ended up concluding that it’s probably him,’ he smiles. He adds: ‘He was quite confident about that, and he did end up offering a very intelligent paper on the topic.’

Even someone who isn’t Al Gore might safely be relied upon to conclude that the internet has been a big factor in shaping global affairs. Kaiser was quick to see the role of modern technology in undermining banking secrecy. In 2004, he gave a speech in Liechtenstein saying that the country needed to reinvent its approach to banking and become tax-compliant. ‘I didn’t make many friends from that, to put it mildly,’ he adds, needlessly. But four years later, Germany paid several million euros for data on German individuals with trusts in Liechtenstein leaked by a former employee of LGT bank, a bank part-owned by the Liechtenstein princely family, and Kaiser’s ideas gained traction. He played a lead role in drafting the Liechtenstein Declaration, which saw the country removed from the OECD’s black list for tax havens, and then helped secure the Liechtenstein Disclosure Facility agreement with the UK.

Kaiser says that his decision to help turn Liechtenstein onshore was not motivated by ethics. ‘To be honest, it was a pure business decision. In this world of transparency, where countries badly need cash, you cannot hide any more. If a bank tells you, “Don’t worry for the next six years, we’ll guarantee your secrecy,” that’s simply not realistic. That’s why we help clients do a health check on tax compliance, and if we discover that they are not compliant, we help them to find a smart solution.’

The LDF isn’t the only reason to consider Liechtenstein, Kaiser says. It has the increasingly rare advantage of zero external debt, as well as a stable, liberal political and economic climate. The political situation in Liechtenstein is an unusual one, as the 2003 constitution grants considerable powers to the prince. Hereditary Prince Alois invited the wrath of pro-choice campaigners after saying that even if a national referendum came out in favour of legalising abortion he would veto the proposal.
 
  
LIECHTENSTEIN’S ABOUT-TURN on banking secrecy was a bold move for a country so heavily dependent on its financial services industry, but perhaps it shouldn’t be surprising that the pocket-sized principality should have taken such an innovative approach to the privacy problem. In Kaiser’s view, the advantage of being in a small box is that it encourages you to think outside of it.

‘Sometimes I wonder how it is that Liechtenstein can produce so many Olympic medallists compared to, for example, Switzerland, when we are so small,’ he says. ‘I think of Hanni Wenzel — she had no national team, just family support, and yet she won gold. I think if you’re in such a small environment, you have to think bigger or think differently — it inspires and motivates you to get beyond the borders.’ There are many who will be grateful for the big ideas emerging from the tiny city-state. 
 
 
Read more by Sophie McBain



 

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