After Wealthfront, UBS dusts off plan to stress banking, tech and productivity

It's back to an 'organic plan' for the bank's wealth management business in the United States, says Iqbal Khan, co-president of UBS Global Wealth Management.

With the potential for acquiring Wealthfront in its rearview mirror, UBS Americas will dust off its business plan from-mid 2021 for its wealth management business in the United States and renew a focus on boosting revenue per adviser, increasing banking and improving technology, including a new broker workstation.

“We are a wealth-centric business, a client- and adviser-led business, particularly in the U.S.,” Iqbal Khan said at the Bank of America Global Research Annual Financials CEO conference Tuesday. Regarding ending the Wealthfront acquisition, he said: “We mutually agreed to terminate that deal.”

“Having said that, we always had an organic plan and we will continue to deliver on the organic plan that we set out to execute,” added Khan. UBS said over the summer that Khan was being promoted to sole president of Global Wealth Management on Oct. 3, after having been co-head with veteran UBS executive Tom Naratil, who is stepping down and leaving the company.

In January, the bank announced plans to acquire the robo-adviser Wealthfront for $1.4 billion. But on Sept. 2, the Friday before Labor Day, both firms said that they had mutually decided to terminate their acquisition agreement.

Industry observers had widely regarded the acquisition as an intriguing step for UBS in the United States, with Wealthfront potentially providing younger, less wealthy clients for UBS’ advisers, who are among the biggest producing in terms of revenue across the financial advice industry. The firm reported 6,266 financial advisers in the Americas at the end of last September and an annual average revenue per adviser of $1.7 million, which is either the highest or among the highest in the industry.

In comparison, Wells Fargo Advisors at the same time reported 12,552 financial advisers who generated annual average revenue of $1.14 million.

Competitors Merrill Lynch, with its Merrill Edge online platform, and Morgan Stanley, with its recent acquisitions of Solium Capital Inc. and ETrade Financial, have increased the pipeline of potential clients for their financial advisers.

UBS is “a wirehouse without a farm team, like Merrill and Morgan Stanley have and to a lesser extent Wells Fargo Advisors,” said Danny Sarch, an industry recruiter. “UBS is doing as good a job as they can, given the demographic of their advisers, who are aging just like everybody else’s, and how hard it is to train advisers.”

“There’s still room to run in getting productivity out of UBS’s advisers,” said Louis Diamond, an industry recruiter. “But UBS is smaller than other wirehouses. They have great FAs, but where do they go from here?”

One clear change for UBS in the U.S. is Naureen Hassan’s ascension to president of UBS Americas next month when Naratil leaves. Hassan has extensive experience in technology.

“Clearly, we’re going to continue to focus on the revenue mix in the U.S., as we’ve been doing over the last couple of years,” Khan said. “We are underpenetrated from a banking perspective, be that on deposits or lending.”

“The second opportunity is on the broader wealth side, and how do you continue to actually hire, retain, but also gain more productivity from your adviser force,” he said. “And last but not least is very much the technology and infrastructure investment that is required to actually help scale the franchise.”

“Those are the three key priorities,” Khan said. “And this is a five-year road map, in terms of taking this franchise in the U.S. to the next level.” He characterized UBS Americas wealth management as a “$2 billion profit before tax business,” or the fourth largest wealth manager in the country.