“A top investment manager needs a clear market opinion”
UBS Wealth Management CEO Jürg Zeltner is converting his division from a pure wealth manager to an investment manager. The move is intended to provide clients with a more up-to-date view of the markets and enable them to better assess the impact of market developments on their own portfolios. Jürg Zeltner wants UBS to project a clear market opinion to the broader public. (Interview: Pierre Weill, UBS AG)
Mr. Zeltner, as CEO of Wealth Management you are, so to speak, UBS’s top-ranking client advisor. What qualities do you think make an ideal client advisor?
Jürg Zeltner: Good client advisors have to like people, they have to like their clients. They have to be passionate not only about the financial markets, but also about what it is that makes the financial markets tick. Their first thought on seeing the morning news needs to be, “What does this mean for my clients and their personal assets?” This means that our client advisors must also be able to categorize and interpret events and assess the repercussions these might have on their clients’ portfolios. Here they can rely on the global expertise of our economists and analysts as a resource.
Information overload can challenge client advisors…
That’s true. Many clients follow current events and market data on their smartphones, meaning that we can only offer our clients added value if we are able to quickly highlight concrete investment opportunities. If heads of government meet and decide something over the weekend, by Monday morning clients want to know what this development means for them and their portfolios. Our economists and analysts must therefore provide client advisors with the data and commentary they need on Sunday, so they can discuss it with their clients on Monday morning. Today, client advisors have an extremely challenging job; they have to be able to keep their clients continually supplied with top-quality information on all asset classes and regions.
A year ago you appointed a Chief Investment Officer. What is his job?
UBS Wealth Management is moving toward becoming an investment manager. The Chief Investment Officer (CIO) has a key role to play in building up these investment management capabilities. He consolidates all market information emanating from research and the capital markets, and also understands the expectations that clients with a complex financial asset structure have on the bank. The CIO and his team use the global market information available to formulate the House View – that is, the current investment strategy of UBS. In concrete terms, this involves consolidating and analyzing the knowledge derived from Asset Management, the Investment Bank and Wealth Management Research. We then share our assessments regarding equities, fixed income, currencies, commodities, and so on. Our client advisors discuss these opinions with their clients in detail in order to devise suitable investment opportunities that take account of their specific circumstances.
What is the idea behind the House View?
By formulating a House View, UBS defines a clear investment position across all asset classes and geographies and actively debates this with clients. We also adapt our product offering to the House View developed by the CIO on an ongoing basis. Our clients can then decide whether they agree with it or prefer to follow an alternative route. In any case, in its role as investment manager, UBS is expected to have a clear opinion about the direction the markets will take.
UBS remains fundamentally committed to the Investment Bank – why is this?
Success for UBS requires an Investment Bank (IB). The IB provides numerous decisive services that our wealth management business and clients simply could not do without. Our Wealth Management division trades huge volumes of securities in a cost-efficient and reliable manner. We need good research on markets, bonds and equities; we need access to the capital markets and the foreign exchange market. Our IB performs all these tasks. Nowadays the emerging economies are the key drivers for growth; we can only tap these markets in collaboration with the IB.
But how large must the Investment Bank be in order to offer these services?
It needs to be global if UBS wants to offer its clients worldwide service. If we operate a leading equities business via the IB, it makes no sense to downsize this artificially if equity trading is important for Wealth Management. The same is true for foreign exchange trading. Between 60 and 70 percent of our clients’ investments are in foreign currencies, and we need a well-functioning currency trading platform in order to support this. In any case, it is important that the IB is geared to client business. The IB must also be profitable.
The US is an interesting market for investors. For financial institutions, however, it is an extremely challenging one. Why does UBS want to be present there?
The US is the world’s largest economy. As a bank striving to succeed for investors through its ideas, global content and worldwide presence, we cannot lose sight of this important capital market. As a wealth manager that raises its profile through first-hand knowledge across all relevant markets and access to the most important asset classes, it is vital that we are physically present. Let me point out that Wealth Management Americas posted a profit in all four quarters last year. This confirms that we are back on track. We don’t just want to be present in the US, we want to be successful – and that is exactly what we have now achieved.
Everyone speaks of the emerging markets as opportunities for investors. Are there also projects from a banking perspective to strengthen UBS’s presence in these regions?
We have positioned the emerging economies as a business area in their own right. Our focus on Asia testifies to our strong belief in the potential of this market. UBS has long had a local presence in Asia’s growth markets. Today we are reaping the rewards of our predecessors’ foresight to open a branch in Hong Kong in 1964. We are expanding our Hong Kong and Singapore booking centers. We are also focusing on six other countries: Brazil, Mexico, Turkey, Israel, Saudia Arabia and Russia. We are making long-term investments in China and India, where building our local presence is a decade-long project. We find ourselves in a similar situation there as our predecessors did when they opened up Hong Kong.
What criteria were used to select these six markets?
To decide where to invest, we look primarily at wealth creation and growth potential. Market access and legal stability are other important criteria. Israel and Turkey – to cite two examples – are home to lots of innovative entrepreneurs. They also have well-functioning capital markets; these are vital to support entrepreneurial ventures, promote growth and build assets. Here, too, we need the IB, which enters these countries before us in order to develop their capital markets. We thereby deliver our value proposition to entrepreneurs who generate wealth, providing them guidance on and access to investment opportunities worldwide.
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