The super-rich really are different. They invest on an institutional scale. Their enterprises deal with investment banks. And their numbers are growing faster than the rest of the high net worth sector. According to the Capgemini Merrill Lynch World Wealth Report, there are now about 70,000 individuals globally with more than USD 30 million in financial assets each.
With a focus on this market, our Wealth Management business launched an ultra high net worth client (UHNWI) initiative in late 2002. The principal aim was to build a unit dedicated to serving ultra-wealthy clients located in Europe, Asia Pacific, Latin America and other regions. The US market is the subject of a separate initiative.
Both moves start from the insight that the needs of ultra high net worth clients differ not only in scale but also qualitatively from those of other wealthy individuals. We discern three “clusters” within this segment, comprising families who behave like institutions and seek family office investment management services; entrepreneurs whose wealth is locked up in their ownermanaged enterprises; and independently wealthy individuals.
The UHNWI business is organized to meet specific requirements in each of these clusters. It comprises its own unit serving family offices, a corporate advisory group specializing in corporate finance solutions for clients with family-owned businesses, and even in-house art banking and vineyard-broking expertise.
In addition, the initiative seeks to “deliver the entire firm” – meaning the resources of all the firm’s Business Groups. Some clients, for example, mandate assets to the Global Asset Management business. Others have turned to the Investment Bank for help with corporate financing issues.
As an example, UBS recently helped a family-owned enterprise to divest a business to a leading multinational. The Investment Bank advised on the sale while the Wealth Management & Business Banking business provided bridging loans for a separate buyout of another part of the business. And now UBS manages the sale proceeds on the family’s behalf.
In the same way, a “one firm” approach informs the advisory process for such clients. A core component here is the “active asset analyzer” adapted from a tool used by UBS’s institutional asset management business. This is a computer-assisted method for gauging the risk / return characteristics of client portfolios as a basis for investment proposals. In parallel, UBS is training a cadre of specialized UHNWI client advisors.
Judged by a January Euromoney poll, these efforts have been well received. In addition to voting UBS the “Best Private Bank” worldwide, the magazine rated UBS “best for ultra high net worth clients” in four countries, top for family office services in Western Europe, as well as best overall for family office services. Prominence in this market also adds to the firm’s credibility with other client sectors.
The awards, together with significant inflows of net new money, indicate that the UBS strategy for the ultra high net worth sector is achieving its aims. The stakes are high. That is clearly illustrated by the significant increase in invested asset levels from our clients with more than CHF 10 million. Invested assets held by them were up 35% in the 18 months to June 2004. In that time, Wealth Management’s total invested assets grew 17%.
And since no institution controls more than a few percent of the ultra high net worth market, rapid growth in both market share and invested assets is possible.
