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Portfolio returns in both good and bad times

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UBS’s expertise is in particular demand from investors when markets are uncertain. Jürg Zeltner, CEO of UBS Wealth Management, explains what UBS does to protect clients‘ wealth and where the bank is keen to grow.

Interview: Dominic Gerster, UBS AG

Have clients been sleeping more soundly since the European Central Bank (ECB) announced a large-scale bond buying program in September?
I don’t think so. The decision has calmed the financial markets temporarily, but the Eurozone’s problems have not been solved. Further progress is needed towards a fiscal and banking union. Clients remain very nervous. Fear of inflation, uncertainty about growth in Asia and worries about the rising geopolitical tensions in the Middle East are raising a lot of questions.

Your organization has over 4,000 client advisors. How are you supporting clients in this tense market situation?
Keeping them informed and up to date are crucial in the current environment. We have to point out what market trends mean for client portfolios and how they might result in a need to take action. Our assessments are summarized in an investment house view that is published on ubs. com/substance. These are issued by our Chief Investment Office, based on the global expertise of our analysts and economists all round the world. What matters for protecting client assets is that we are able to share our opinions with clients quickly when events take place and discuss investment options based on these.

Plenty of asset managers have their own investment house view. What makes UBS different?
Our house view is different because it brings together the work of economists, analysts and investment experts from all divisions of UBS. All the relevant asset classes are analyzed. So when we talk about commodities in Brazil we are not doing so based on studies we have bought in, but on the opinions of our experts on the ground. We can only offer this because we operate globally. The house view is also constantly supported by exchanges with a whole series of well known external specialists. This aims to avoid the trap of organizational blindness.

Are clients satisfied with wealth protection in these challenging times, or do they expect to make a return?
Our clients have to have a return whether times are good or bad. Of course there is no absolute guarantee, but we have laid the groundwork for operations that focus on performance. We have invested in setting up the Investment Office, in the global product range and in training our client advisors. When it comes to knowledge and professional skills, our client advisors have to meet high standards. This year our process for examining and certifying advisors won external recognition.

Many clients follow current events and market data on their smartphones and are well informed. What does this mean for your client advisors?
We know from surveys of our clients that 65% of them spend at least one hour a day thinking about the markets and financial issues, and that number is rising. So, in addition to advisory skills, advisors have to have at least as much solid knowledge about finance and the markets. Investors are well informed and expect UBS to be constantly ready to offer expertise and investment proposals. Today, client advisors have an extremely challenging job, since they have to be able to keep their clients continually supplied with top-quality information on all asset classes and regions. This expertise is increasingly becoming a competitive factor and a distinguishing feature.

Given their good investment knowledge, are investors today keener to take investment decisions themselves?
We have noticed that when the market environment is challenging, clients increasingly decide to appoint UBS to manage their assets. This is probably because with most asset management mandates clients are able to consistently participate in the bank’s own investment house view, and also they can be sure of investment suitability. By that I mean that the financial products match the client’s investment horizon and appetite. Nowadays, regular portfolio discussions between advisor and client and a “health check” should be part of every client relationship. Not everyone in the industry has realized this yet. Of course there are also some clients who want to be involved in investment decisions. That is why we offer the full range of options for delegating asset management decisions.

You say that investors should earn a decent return in every market environment. Are you managing to do that with the asset management mandates?
Return expectations always have to be based on the risk tolerance and objectives of the individual investor. Despite the difficult market conditions, the overwhelming majority of mandate solutions are achieving a positive investment return after fees.

Let’s talk about the strategy of UBS Wealth Management: where are you putting the global focus?
Definitely in Asia and the emerging markets, but we are also selectively expanding our presence in Europe. Israel and Turkey are growing strongly and we are investing there. Switzerland is another focus.

How do clients benefit from the global presence of UBS?
Today we can no longer expect financial markets to just keep going up. By expanding our presence in places like Asia and Latin America, we are gaining access to new growth opportunities so we can keep investors’ return prospects intact despite the market volatility. In addition to a global product offering we also provide trouble- free processing of client orders by being present in all the key financial markets and holding seats on about 80 exchanges.