UBS boosts U.S. advisor count to court 'largest wealth pool'

UBS boosts U.S. advisor headcount to target world's 'largest wealth pool'

October 25, 2022 10:53 PM

UBS said it wants to bring more transparency to philanthropy and use investment capital to lower the risk that nonprofits take on in running programs - freeing up their resources to pursue even more projects.

UBS boosted its hiring of financial advisors in the U.S. during the third quarter as its global advisor headcount remained flat — a signal to wirehouse rivals that the Swiss bank giant is gunning for the biggest prize in global wealth management.

"The U.S. is a very important region for us. It's the largest wealth pool in the world," bank CEO Ralph Hamers said in an earnings call Tuesday. "We expect this to continue to grow over time by around 5%. That's why it is a focus of our strategy. That's why we will continue to invest there."

Total profits at the Zurich-based bank fell over July through September as revenue took a hit from depressed client assets. But it beat earnings expectations as its wealth business prospered on strong results in the Americas. That core regional segment had revenue of $3.4 billion, though it was still down 13% on year-ago levels of $3.9 billion.

Hamers, who came on board in 2020 after leading digital changes at Dutch bank ING, is seeking to flatten hierarchies and temper traditions in his campaign to make UBS more tech-centered despite a failed deal to buy Wealthfront. He's at odds with a powerful rival — Iqbal Khan, UBS's president of global wealth management, who sides with traditionalists at the company, according to a Bloomberg report.

Hamers appeared to strike a note of balance in his remarks on the earnings call, saying that UBS would help financial advisors in the U.S. market with "further digital enhancement, in terms of supporting them in the work they do" with digital banking and robo advising. But the bank would also be "looking at the higher wealth segment, the family offices, to do more bespoke business," he said.

Industry News

UBS hires $1B Morgan Stanley team as part of UHNW drive

October 24, 2022 11:14 AM

To see the main takeaways from UBS's third-quarter earnings, scroll down the slideshow. For coverage of the firm's second-quarter earnings, click here. For a look at the results from the first quarter, follow this link.

The big numbers

Profits were $1.7 billion in the third quarter, down 24% year over year from $2.3 billion. Revenue fell 10% to $8.2 billion from $9.1 billion. Operating expenses decreased by 6%. The global wealth management team logged $17 billion in net new fee-generating assets.

"Our exposure to rising interest rates across the globe and expense controls contributed to the quarter's solid performance," the bank said in a press release. The company repurchased $1 billion of its own shares during the quarter and looks to buy $5.5 billion by the year's end.

Volatility strategies

Hamers said that while institutional clients "remained very active on the back of high volatility of foreign exchange and rates," private investors were cautious and largely stayed put, "waiting for signs of improvement."

Individual clients diversified their portfolios "through managed solutions, and made additional commitments to private markets," Hamers said. He said that wealth management clients "are seeking higher-yielding products on the back of higher interest rates. We're capturing this demand through savings, through CDs, money market funds."

Hamers added that "demand for separately managed accounts and alternatives continue to drive inflows that fueled over $4 billion of net new fee-generating assets, mostly from our existing financial adviser base."

Still, clients are worried. "They're concerned about inflation, about the energy prices, the war in Ukraine, residual effects from the pandemic; economies are slowing down," Hamers said. "Central banks are raising rates at a record pace, and that's affecting asset levels." He said he expected the trends to continue through at least the end of the year.

Financial advisors

The number of advisors in the Americas grew 2% to 6,257, up from 6,139 in the past quarter. Globally, advisor count only grew by a net 6 advisors, to 9,230, from the previous quarter's 9,224, and was down 2% from year-ago levels of 9,399. Hailing the "strong quarter in advisor recruiting," Hamers said that "our hiring pipeline remains strong as well for the fourth quarter."

About Wealthfront

"It's not like we're on the hunt for deals," Hamers said in a TV interview with Bloomberg Tuesday, when asked about how UBS was moving on from its failed Wealthfront acquisition.

Hamers said in the earnings call that he was focused on retaining and providing better digital services to existing clients. "We have a lot of clients in what we would call lower wealth bands, $250,000 to $1 million and $2 million. That's one. We have 2 million clients in Workplace Wealth. Those are segments that we already cater for, for which we feel that we have to be more efficient in terms of how we deliver our services."

The economy

Hamers said in the earnings call that "in the U.S, the economy is holding up relatively better than other regions, consumer balance sheet and economic, well, employment data are solid, but inflation remains high. As a result, we project Fed funds to peak at 5% to 5.25%, and such elevated rates increase the risk of recession. Interest rate hikes have reduced asset levels and muted client activity as well, but they have supported net interest income which is up 38% year-over-year."