UBS reaps rewards of Asia-first strategy
Many of the world’s largest wealth managers have tried to conquer Asia but few have been as successful as UBS, with adviser recruitment and digital innovation central to its success
For yet another year, UBS reigns as the leading global wealth provider in assets under management.
For many this will not come as a surprise. The Swiss wealth provider has sat near the top of the pile for years and their consistency and adaptability to remain competitive is to only be admired. Scorpio’s latest Global Private Banking Benchmark shows the Swiss provider now controls almost 10 per cent of the total global wealth market.
But what is it they are doing that makes them so successful? Over the last five years, UBS has been ambitiously growing its Asian footprint – in part due to stricter regulations in its home market and simultaneously the exponential growth of high net worth individuals (HNWIs) in the region. The institution has made Asia Pacific (Apac) their core strategic growth objective, shifting away from their home Emea market – and it has worked.
Since 2009, UBS has reduced its AuM in Europe to 42 per cent, down from 48 per cent at its peak in 2010. However, in Apac invested assets have grown 10 per cent in six years, from 17 per cent of the firm’s total assets to an impressive 27 per cent. Gap analysis reveals just how significant the wealth provider’s strategic shift has been, with a 26 point gap in 2010 reducing to just 15 points in 2014 between its Emea and Apac invested asset figures (see chart).
UBS is not unique in targeting Apac for growth. A significant proportion of the world’s largest wealth providers have all looked East in search of asset growth but not all have been successful. Major private banks such Société Générale and Coutts have in recent years sold off their Apac businesses and the rise of local players like ICBC and DBS Private Bank, who are currently ranked by The Banker in the top 50 private banking brands globally, means success is no guarantee.
UBS though has become the leading wealth provider in Apac, ousting Citi Private Bank in 2012 and only looks set to continue its dominance in the region.
How it has become so successful in Apac is open to debate. UBS has aggressively recruited advisers in the region, hiring 45 in 2013 and an additional 154 in 2014. According to Scorpio Partnership’s own internal research, there are only 4,000 relationship managers in Hong Kong and Singapore. The growth of HNWIs is vastly outstripping the supply of experienced advisory talent and UBS is plugging this demand gap and reaping the rewards.
UBS has also made a strong digital push to enhance their service model and client engagement. The firm recently rolled out its wealth management app for clients wanting a faster service. The new app can scan a client’s portfolio, test it against critical risk factors and flag when it deviates from the client’s investment strategy or when something goes off-track.
UBS have also introduced an innovation centre in the region to remain on top of Asian clients’ digital requirements.
Digital innovation is certainly a way forward in the region as recent work by Scorpio Partnership and M&G found Asian HNWIs are active network builders online. It is a common misconception that the wealthy are inherently private and nervous about their online interactions. However, Asia’s HNWIs are instead actively building digital networks with the number of contacts extending beyond 140 across all social media sites.
The wealthy in Asia are incorporating digital platforms into their lives and wealth providers will need to do the same with their service propositions.
It is unclear what the perfect formula to success in Apac is and why some providers struggle in comparison to others. What is clear though is that UBS has identified some aspects as to how to be successful and this is paying dividends.
The Apac region can be a major source of growth for a firm if their strategy is appropriate. Whether this strategy is digitally-led or an on-the-ground presence, one thing is clear, the sun is rising in the East for the world’s leading wealth provider.
Hubert Brown, senior analyst at wealth management think-tank Scorpio Partnership
