Flex and the City

Hello everybody. This is Rachel Treece, CEO of FTS global, and I am honored today to have Serge Krancenblum with me today. Serge is the Group Executive Chairman of IQ-EQ and we are in the middle of the Covid 19 crisis and Serge, believe it or not, is the first person I've come into contact with, although not contact with, virtual contact with, who has actually been through the Covid 19 virus. How are you Serge?

Hello, Rachel? I'm very well. I had, uh, uh, kind of mild version of the virus, uh, 11 days ago. There's some fever and coughing. I still cough a little, but, um, I'm in, uh, it was, it was globally Okay. You know, I could, uh, I could stand and uh, and keep working, you know, I mean, so no real problem. So, uh, I hope most of the people we know will have that mild version and hopefully that will save them from, uh, catching it again. You know, I mean, when everybody will be able to go out.

Absolutely. Well, you look very well Serge. And thank you for sharing that with our listeners because I think everybody's a very, very worried about the situation, um, at the moment. So, um, I'd love to know you're an entrepreneur and a leader in financial services. And I'd love to know a little bit more about you and your story. So could you tell our listeners a little bit about yourself?

Sure. Um, I'm the happy father of two girls and even a grandfather uh, of one little boy. Um, I started in Luxembourg in 85.

Wow. You don't look old enough you don't look old enough ha ha.

Ha ha, So thank you. But, um, I started in 85 in Luxembourg, just by chance, you know, I was born in Metz on the other side of the border. I studied in Paris and after in the U.S. and when I came back, um, I was with my dad visiting a bank in Luxembourg and my dad said, why you don't ask for a job here? And, uh, I said, I don't want to work in Luxembourg and I don't want to work for a bank. Uh, I knew what a bank was like, kind of because I, I had training ship during the summers at Merrill Lynch, but, um, frankly I wanted to work in international trade to travel the world. And I thought that working in a bank in Luxembourg would keep me in a very small country and, uh, in an area I didn't like. But I took the job because it was well-paid.

I thought I was going to stay for two months and it was, uh, 35 years ago. Wow. I'm so happy I made that choice, which was not really, I mean a choice. It was just by chance. So I started with that bank and credit bank in Luxembourg um, the market was, so I mean, incredibly busy and incredibly growing that, uh, there were so many opportunities for people wanted to work hard. And so after a few years in the bank working, uh, you know, in different areas, corporate finance, corporate trust and agencies, uh, selling our services all over the world, um, I, uh, start working for the sister company of the, uh, of the bank, that was the trust company of the bank. Um, and the trust company of the bank is the roots of what is called today IQ-EQ So I started there as being head of, uh, uh, advisory services and um, and selling, uh, Luxembourg holding companies to, um, to international families and, uh, large corporates.

And, um, in 98, the bank decided to sell the business. Uh, we had, we couldn't do a management buy outs, so we had the wonderful white Knight who was called Arthur Anderson at the time, right? Norbert Berker came and bought the business. And my boss and I became co CEO of the business. And, uh, two years after we bought the business from Arthur Anderson because there were conflict of interest and we wanted to work side by side with Anderson. And unfortunately, I mean, you know, what happened, I'm just saying disappeared. And we had to manage our own future, we grew the business quite a lot as independent, as an independent player. But we had a view that we needed to consolidate the market in Luxembourg because we wanted to first to, to start to do fund administration. So we were chartered accountants at the time. And so in order to do it, we wanted to have the backup of a bank.

And so we were acquired by Sal Oppenheim, uh, during five years. We consolidated the Luxembourg market. We had a lot of growth and unfortunately, you know, the bank was almost bankrupt after the crisis. So I went to see them and ask, uh, you know, the bank and Deutsche bank that was, uh, uh, chosen to, to, uh, to take them over, uh, to buy the business back from them. And so we bought the business back from them with BIP and Luxembourg the, uh, the investment fund. Uh, we, uh, we made it in only three weeks, uh, with a team of managers from, from, uh, from, uh, what was called at the time SGG. And, um, and from that we made the second operation, the second MBO with Kobe Parr in Belgium. And with Kobe Parr, we wanted to become a European player. So I grew the business in the Netherlands by first organic growth and after making two very large acquisitions there, because my biggest competitors at the time were the Dutch players. And so we wanted also to be present there. And, uh, that was in, uh, in 2010. And, um, we, we were with Kobe Parr for five years, but we had other ambitions to become a world player. So what we did, I introduced to Kobe Parr, uh, another investment fund Astorg partners. Um, and, uh, we made a third LBU on the shares of the company. And, uh, since then, uh, since uh, 2015, I've made 14 acquisitions and now we are number four in the world in investor services.

Wow. That's a big story. So I'm really curious to know as an entrepreneur in financial services, and a leader, what does it take and what are the traits that are needed? What are the traits that you have that have taken you on this journey?

I think it's, everything is in the entrepreneurial spirit. You know, you need to be hungry. Okay. And you need to be someone who acts, you know, and those are maybe, I mean, two of the most important traits I have. You know, I love to act, to take decisions. I'm not a spiritual leader. I'm an acting leader. So, um, I, my, my, my thing is really, I love to build and to also have a positive impact on society, you know, and on people. So, um,

I think this is very important. And in order to do this, you need to have, you know what I mean, to be part of the global ecosystem. I mean, that's why I'm in, I share my time between, you know, my, my, my companies also very active in professional associations. I'm the Chairman of three professional associations, the association of, uh, the Luxembourg, uh, alternative asset administrator's association, the investment facilitation forum, and also the Luxembourg association for family offices. So this is, I think something which is very important because you cannot only care about your business, you have to care about the industry as a whole in your main market but also everywhere.

Um, and is there enough care about the industry Serge?

There is there, I think there, I mean, you can always wish to have more from, from the different players in the ecosystem that I think there is definitely, and in, uh, the, uh, in Luxembourg in particular, the government understands that we are, uh, very important, um, link into the ecosystem of private equity and real estate, uh, investments. So we are the administrators of the, of that industry. And we do contribute to more than 1 billion of the state revenue. Uh, it was direct in direct taxes, you know, in, in, in what we do. So this is very important and I understand that. I mean, we know that the government understands this because I'm not part of the Occum de la Place de L'ancienne you know, with the minister of finance in order to advise the ministry, um, new regulations and new laws, uh, which, uh, help Luxembourg, I mean, staying at the forefronts of the, uh, this private equity or real estate, uh, uh, world ecosystems.

Absolutely. So I'd love to bring the conversation back to you. If I may Serge, I'd love to ask you, who would be the most inspiring person, um, in financial services as a financial services leader that might've inspired you in your own career? To date?

It's not an easy answer for me because I was never infatuated. Uh, you know, I mean, uh, when I was young or even now, you know, I was never, I mean, into, uh, uh, I'm mean an incredible sportsperson or singer or performer or anything however. I must say that a few people have inspired me to become the leader I am now of them. I mean, a cousin of my dad's was in the U S and when I studied in the U S the guy used to work for one of the big U S broker used to work for the wealthiest person of this world. And I came from Matz, you know, it was small. A city. I've never met anyone wealthy, you know, I'm in, didn't travel too much. Uh, and when I arrived in New York meeting, you know, my cousin, I mean, it was much older than I was.

And, uh, meeting some of his clients at the parties he was giving on these in his apartment on park Avenue. Uh, gave me a really the drive to, um, to first, I mean gave me the idea that there was something else and gave me the drive to, to succeed and to, and to be an entrepreneur. Really. So, I mean, he's name is.. I mean it was Larry died unfortunately, two years ago, but he was really inspirational to me, um, you know, among the other people I met I think I take, you know, from every meeting I have and every person I meet, I think I'm every time more smart, you know, smarter, you know, I really learned from everyone. That's why I never refuse a meeting almost, you know, because I think you can learn so much, you know, from, from meeting other people and seeing them, you know, acting in life. And so there are people like this, you know, I can name, you know, Nobert Becker, you know, was really inspirational to me. I mean, he was my boss at the time of Henderson and then such an entrepreneur. I think, I mean, he, uh, if he brings Luxembourg to a different stage and the ease is really impressive,

Absolutely. He's, uh, his reputation precedes him. Um, I always remember hearing about Norbert Becker, and Mark Tolouse and we all know what happened to Mark Toulouse. So, um, I'd love to ask you, um, in your opinion, what would be a game changer as an entrepreneur and somebody who's really, really creative and has this incredible growth mindset, what would be a game changer that would make financial services better?

Hmm. I think, you know, I mean, we can always pick up digitalization, you know, I mean, and definitely that's the name of the game. But I think at the same time, you need digitalization for in the financial industry, especially because there is a change of generation, you know, in terms of who the investors are and who are the players are in the, in the industry. But at the same time, I think you need very, um, personal services. Hmm. So you would need both. So for, I mean, basic, uh, solutions, you need digitalization, but you need also the personal touch. And I think one cannot go without the other. And um, you know, that's what we, we, we, we, we have been doing it IQ-EQ and it were, our names come from our name come from is there, you know, we need the, um, the technical knowledge and we need to be more and more sophisticated in terms of technical knowledge and, and technical solutions. I.T. And, and software solutions. At the same time, the personal relationship and the understanding of our clients, uh, the EQ parts, you know, emotional caution is so important and very often in the financial industry, people do not think it's important, but I think it's vital.

Mm. So what you're talking about is how important being human is in financial services.

Absolutely. Absolutely. This is, I mean, as important as in any other industry, you know, and especially, I mean, times we are, we are, are experiencing now. You know what I mean? You see this terrible plague, you know, being human and having personal connections, you know, taking the time to reconnect with people. Uh, at that time, you know, I'm always working on new acquisitions for the group because I'm going to be need new services or new geographies and this morning I had a VC call with a guy, you know, who I mean, he was so happy I was reaching out to him. Yeah. He was so happy because you know, people only think about business and you need to be human. You never, you know, I mean, it's very important to have a personal relationship with people helps so much.

Um, which, which leads me nicely onto your leadership style. Um, for those listeners who listen to flex in the city, they'll know that I do a little bit of research on the people that I'm interviewing. And I asked a few people about your own leadership style Serge and the words that, uh, I was told were that you are human, that you are transformational and that you are energetic.

Yeah. They do resonate, transformed. I mean human. I hope I am. And I think I am very human, uh, transformational. I must say that I have so much transformed my organization every five years, you know, and, uh, this is, I mean, it has nothing to do with what, with what, it was not the same type of clients, not the same type of solutions. You know, it used to be a very local player and now it's international. And, um, and this is not the end. I mean, I am very ambitious and I want to grow forward, you know, because I think without projects you die. So I have a lot of projects still for for my business, the other adjective words. Uh, and they're energetic. Yes. I think I'm energetic as I told you. I like to act, you know, I, I love to have discussions, but not the discussions for the sake of discussions.

I want to have decisions, uh, and uh, and to act on them. And if I could tell you about my, my leadership style is more like a, you know, the difference between, uh, certain, uh, different countries in terms of the army. I'm like in the Israeli army, the general, I mean, isn't the prompt and fights first, you know, and this is, I mean, what is the success of the Israeli army? And, uh, that's the way I do, you know, I'm still, you know, I'm the executive chairman, the founder of the group and the executive chairman. So I'm much more on the strategy and on the acquisition non-organic growth for the time being. But at the same time I'm still there to, uh, to, um, instant advise people to find new solutions, to find new solutions myself, to still sit on the board of directors of a few important clients, meet them when our meet even prospects, you know, being very active and being at the front of what we do.

Mm. So how would you describe, um, in a few words, the culture of IQ-EQ?

Um, I think it's a very entrepreneurial culture. You know, because what we do, even when we acquire businesses, in fact it's not the businesses we acquire, it's, I mean we make sure that we merge with other entrepreneurs and those guys are there and are going to have the capacity to develop themselves and continue developing the business within the group. This is very important. So it's really, I mean the, the mentality is very entrepreneurial. Um, I think we have three important values in the group, which are authenticity to be bold and to be collaborative. And you know, it says all, you know, and we try to make sure that, uh, people, you know, I mean you can change the competencies of people but you cannot change their values, say are they way of behavior. So it's very important that when we hire people or when we make acquisitions, we are certain that we share the same values and the values are not the one that everybody says, you know, client first. Hopefully we have our clients and our people first. But, uh, this is too easy. You know, when we need to share the real values. And I think a lot is also in our name. You know, as I mentioned, IQ-EQ, you know, we want people with the two sides of the brain.

Yeah, absolutely. And so what skills or behaviors or competencies do you think are needed in financial services now and in the next five years Serge?

I think the competences and at least, I mean on the leadership side are the same. You need to have some, uh, the leader needs to have a purpose for the organization, needs to have a vision and show leadership. You know, this is very important, but also in five years you will need to have adaptability. So it's the same, you know, you know what I mean? I cannot tell you what will be the future, you know, but I think we need to always be prepared to be flexible and to make sure that we are going to be according to what is going to be the state of the market at that time in very sustainable businesses. A few years ago, for example, I mean, the industry was heavily investing in multinational, uh, corporations, uh, services. And now you can imagine what's happening with Babs and anti avoidance, uh, regulations.

It's very difficult to service those large multinationals because they do not set up anymore holding companies without substance, you know, in the different countries. I mean, only for tax, uh, uh, purposes. Uh, I was convinced of this. And so my aim was, um, in a few years ago in, uh, to completely transform the client mixed and to be much more, uh, uh, working, um, asset managers, private equity and real estate and that, uh, private debt asset managers and very big family offices. And now our group is mostly, you know, uh, taking its revenues from those two categories. And so we have a very sustainable business. So we look at the future in this way. But in five years, I think a leader will need also to think in a very sustainable way for the future and being very flexible because sometimes, you know, look at what happened. I mean that black Swan for the Covid, nobody knew. And it's going to the, for the people who have a short term view, you know, everybody asks me all the time, Oh, where are you going to sell your business again? So tech, can you imagine if I had, I'm in build the whole business to be sold in, I don't know, eight months. Yeah. And you miss that opportunity because of an external event. You can be dead. Yeah.

So constant adaptability..

Yes. Constant adaptability. And second, always look at the longterm.

And are they the pieces of advice you would give to a young financial services manager starting his or her career in the industry? Is there any other advice that you'd give to them?

Um, maybe an advice that I apply to myself is, as I told you, never refuse a meeting. I mean, there are so many people who feel they are too important. They don't accept meetings. They don't want even to meet someone with a salesperson because they think, you know, I mean, it's not for them for sure. I'm not getting to, uh, to meet, uh, twice. You know, someone wants to sell, sell me copy machines, you know, these kinds of things. But you knew from everyone you learn. And this morning I was doing mentoring at a Turkish students at the, uh, uh, wealth management program of the Luxembourg university over the phone. And after I was with one of the, one of my peers, you know what I mean? Uh, uh, a guy who is the CEO of and the owner off a top business in Europe. So it's very different and frankly I enjoy it. And so, I mean there are so many people, uh, you know, we don't have the same responsibilities but do not spend the time because they think they are over, they are too important for, for meeting new people. I think they are wrong. So advice would be meet new people, learn from them, be very open and help others because the best chance they can have is to be a chance for the others.

Hmm. So as you're so positive and energetic, is there anything that prevents you from sleeping at night?

There is no joke about it. There is the guy who turns and turns in his bed, it's four o'clock in the morning, you know, and he couldn't, it cannot sleep at all. So his wife asking, I mean, what's happening? You said, you know, I have my meeting with my friend Paul tomorrow and you know, I owe him money and you know, I don't have the money. What can I do? You know, I can't sleep. It's terrible. So you, he's wife takes the phone rings Paul. And after 10 rings, you know, he answers is completely asleep. And she says, do you know Paul ,Morris owes you money? You have a meeting with him tomorrow morning at nine? You said? Yes. Okay. It doesn't have the money. Good night. And she hangs up, goes to her husband and says, now he can sleep. So now go to sleep. So that's... When I have a problem I try to, uh, either to solve it or for someone else to have the problem.

Yeah, that's good advice. Very good advice. Serge I know one of your, um, big pastimes is, is martial arts. So, so what benefits has martial arts brought you as a leader in financial services and why?

I think, you know, in general, sports are very good. You know what I mean? For the people who can, uh, do sports, I mean there are very good for their overall life, you know what I mean? When the way they behave, you know, it gives you confidence. It gives you, uh, stamina, eh, and that's very good. But I think martial arts are very special. First of all, it's not a team play. So you cannot say, you know, it helps me being a team player. That's not true. But, um, I think you need to be extremely focused when you, when you do martial arts, I mean, it, it's not only being a fighter because being a fighter, you know, there are many people who are very aggressive and they think they would be good, but it doesn't work. You know, you need to be extremely focused. You need to be hardworking. And I've been hardworking all my life. And I think it comes also from, uh, from, from the martial arts. And, um, I think it helps.. Indeed it helped me quite a lot on the site. And, uh, you know, I have one of my favorite sentence, which is, um, um, the way of the warrior is resolute acceptance of this.

Ooh, I like it. That's a powerful phrase, isn't it?

Yeah, it's from a Samurai from the 16th century. Wow. It's one of my favorite sentences.

Yeah. I love it. I love it. And your other pastime I understand, which is one that I believe you share with me is art. Who's your favourite artist and why?

I'm not, I'm not an artist at all, I have no skills at all but, um, I do collect, um, mostly painting and sculpture. Um, um, quite the eclectic. But, uh, those last years I've, uh, I've been very much into contemporary art and mostly in, uh, Afro-Americans, uh, artists. So, um, a hue of my favourite artists are, uh, you know, for example, uh, uh, Jean-Michelle Basquiat.

Hmm. Jean- Michelle Basquiat is one of my favorites too.

Yeah. So it's one of my favorite artists but also, uh, uh, young ones like, uh, uh, so I mean, I love this.

Mm. What is it about that you love?

Um, I love, I love the, the disruption, you know, of, um, contemporary arts. You know, I don't like everything, but I like the way, you know what I mean? Art always disrupts and, and, uh, and, and transform society,

which leads me beautifully onto my last question. To you. Serge. If you were disrupting financial services, what would the future look like?

Frankly, I don't know what the future is going to be like, but what I know from now there is going to be more and more transparency, that's for sure. Because the young generations, they want transparency. They want transparency for everything in terms of, uh, information. They want transparency on the impact on society of what's, uh, uh, the investment professionals have. Uh, the, um, you know, everyone speaks of ESG very often. This is full greenwashing. But I think, you know, it's not only everything about the environment, it's mostly to make sure the people, I mean the future won't accept that any harm is being uh, made on this, on the society in general. So they to be sure that the people are conscious of this and that they will, I mean have the the right information in order to avoid to harm society. And you knew, I mean we are at IQ-EQ.

I mean we are more and more advising people on, you know everything about ESG anticorruption anti-money laundering to make sure that the private equity firms are going to be fully compliant. Even the one investing in emerging markets which where it's a little more difficult and I think it's a demand from the investors. We see it from the very big family offices when there is a change of generation and that everyone is going to be a part of that and the people who will not going to be part of that are going to be out of the market.

Absolutely. Surge. It's been an absolute pleasure having you on flex in the city this afternoon, especially having you having been ill recently. It's been a joy speaking to you and you're a perfect leader for flex in the city. Thank you so much for joining us.

Many thanks, Rachel, which was a pleasure.