UBS eyes independent space

The firm has been expanding its product offerings and has considered an acquisition as independent firms move to compete for ultrawealthy clients

Mar 19, 2014 @ 2:38 pm

By Mason Braswell

UBS Wealth Management Americas has been updating its product offerings and has even considered branching out into the independent advice channel as registered investment advisers become a more serious rival in the competition for high-net-worth clientele.

“One area we look at a lot is the RIA space, which has been growing,” Jason Chandler, head of UBS's Advisor Group, said at a press briefing in New York Wednesday. “It's a part of the industry that we watch closely in terms of client trends and [financial adviser] trends to make sure that we are thinking about it strategically.”

In recent years, UBS has been making its own push for the financial planning business of households with over $1 million in assets under its “advice beyond investing” mantra. But planners in the independent space have been catching up and becoming a more serious force as technology and product offerings improve, according to John Mathews, who heads UBS's Private Wealth Management group of around 350 advisers focused on ultrawealthy clients.

UBS considered adding an independent firm, similar to Wells Fargo Advisors Financial Network, where around 1,500 advisers function as the independent arm of the wirehouse.

“We've looked at it,” Mr. Mathews said. “We really have made no decision on it, but we don't have any desire to do it now.”

Mr. Mathews said one concern would be how it would distract employee advisers and may disrupt the culture to have a second channel.

“Culturally, we're at a pretty good place right now, and if we introduce a new channel, it could be viewed as, 'Why are those people getting paid more,' or something like that,” he said. “But we're pragmatic, too, so if the market turned that direction years from now, we'd have to consider it.”

Mr. Chandler said he felt it did not make sense for the firm at this time, but that he did not discount the option in the future.

“We think about it,” he said at the briefing. “We always have the option, but we believe that our best way forward with our 7,100 people is to keep with the strategy that we're on.”

To stay ahead of growth in the independent space, UBS has been working to make sure its push toward wealth management includes offerings such as banking and insurance products, where UBS sees it has a competitive advantage, Mr. Chandler said at the briefing.

“We'll survey clients about why they're attracted to an RIA, and it's because they want objective advice, and they want to go through a process and do it with someone they trust,” he explained. “We think we can offer that with all the benefits that a UBS has — the ability to do your mortgage, insurance and financial plan.”

Currently around 11% of the firm's 7,100 advisers are charging clients for financial plans and 13% of the total force is doing more than 10 plans a year. Some of those may not charge for their plans.

David McWilliams, who is the head of wealth management transformation and helped coin the phrase “advice beyond investing,” said he is hoping to have at least 20% of advisers doing wealth management instead of more transactional-based investment management.

“Most take four to seven years to get in the culture,” he said. “If you get one in five doing it, supposedly it's in the culture.”

Mr. McWilliams said the firm's ability to find loans for wealthy clients represented a “big gap in the offering” between the wirehouse and independent space.

“The richer a person is, the more they use other people's money [and] they don't use their own money,” he said. “The bigger the RIA is, the more they have this gap to service high-net-worth clients, and they also don't have an insurance company.”

John Mathews, head of private wealth management at UBS, on how the firm aims to get an edge over independent advisers

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