August Hatecke, co-head wealth management Asia Pacific, country head UBS Singapore, UBS Global Wealth Management shares his views with Asian Private Banker in ‘The Final Word’, a year in review by the region’s private banking leaders as they share their thoughts and opinions on key issues around industry trends, business performance, investments, regulations, and technology.
Industry Trends | In what ways has the COVID-19 pandemic irrevocably changed the private banking industry and your own bank’s approach to operations and service?
Despite COVID-19, UBS Global Wealth Management in APAC has seen growth in our performance and is the strongest region with record profit before tax (PBT) growth in Q3 2020. This recent quarter marks the best Q3 and best 9M PBT in a decade globally.
We are the first in the industry to achieve US$500 billion in invested assets. UBS Global Wealth Management in APAC today contributes 30% to UBS Global Wealth Management overall.
We understand our clients beyond their wealth needs and we have stayed close to them during the pandemic. Our most recent client survey can testify to that: about 90% of our clients are happy and satisfied with UBS (87%) and their Client Advisors (92%).
We adapt and engage our clients virtually in a seamless manner. Our digital-readiness has prepared us for all situations. This outbreak has accelerated our plans and our hybrid client service model from high-tech to high-touch. This model ensures that there is no compromise to our service. So even without meeting our clients, we are talking to them every day on the phone and video conferences.
The COVID-19 outbreak has created new ways of doing business. Some of these innovations will remain post-COVID-19. However, video calls and virtual events will not replace the basic human need for face-to-face interactions. Will there still be business travel? For sure. Do we need to travel as much as before? That is the question.
Our client engagement increased substantially in 2020 with clients having more time to discuss investments and the use of video calls. Our CIO team, client advisors and solutions specialists interacted more with clients, with more meetings, increased productivity and effectiveness. We believe that this is the new normal.
Our client events have gone virtual and a hybrid model of virtual cum physical can be expected after COVID-19. Our flagship event, UBS Year Ahead 2021, themed, The Next Big Thing, will be held virtually in January for the first time ever. The silver lining is the ability to access UBS’s global network of subject matter experts. For our clients, the experience would be akin to attending a global conference with experts speaking from NYC, London, Shanghai. This easier access to our first class network will irrevocably upgrade what we can offer clients in future.
Client needs have changed with COVID-19 and we believe that there will be many more conversations on wealth planning and succession planning topics. Hence clients will be looking to work more closely with private banks that have the ability to offer a holistic one bank approach. Our UBS Wealth Way provides advice beyond investments.
We continued to adapt and innovate during this time. For example, given travel restrictions, we launched a Digital Onboarding process for Singapore in August. With the UBS Welcome App, prospects can certify ID copies with the ease of a video call, which will help eliminate travel needs for ID verification.
In fact, the COVID-19 outbreak does not make our business “become digital”, it simply accelerated our plans and helped to make some decisions faster.
At UBS, we always consider employee health and well-being as our top priority. We listen to our staff all the time, we understand everyone has difference challenges during the outbreak and while we enable most of our staff WFH, we support our employees to ensure that they are comfortable, safe and healthy by offering a wide range of health benefits and wellness programmes in order to lead our staff a healthier lifestyle.
Business Performance | NNA gathering and account opening have proven challenging in a pandemic-affected world. If we continue to experience lockdowns and travel restrictions in 2021, how can private banking businesses adapt?
We believe there are still many opportunities for the wealth management industry ahead as long as we are ready to act diligently to different situations and challenges.
The most important issue right now is that we stay close to our clients, bring them ideas to help them navigate the current volatility. In 3Q20, we achieved US$10.1 billion of NNM, which was the highest quarter for 2020.
In our recent client survey, we saw a significant increase in improved satisfaction with the bank and with our client advisors. This is a reflection of our commitment to deliver a best-in-class experience to all clients.
The pandemic is transforming the way we do business and how we operate – the industry has to increase automation and digitalisation. Our digital readiness has prepared us for all situations. Digital is innate and automatic in our business, transforming the way we work and how we engage clients.
This COVID-19 outbreak has not made our business “become digital” but it has accelerated our plans and facilitated our investment advisory the same way it has done all along. Our hybrid client service model from high-tech to high-touch ensures that there is no compromise to our best-in-class service.
Investments | What key investment themes shape your bank’s 2021 outlook — and why?
We are bullish about 2021 and are overweight equities. We believe the vaccine rollout and supportive central banks will drive equity markets higher.
Catch-up or laggard plays represent near term opportunities as economies slowly return to normal.
These include US mid-caps, European small-mid caps, select financials, energy, industrials and consumer discretionary. Asia ex-Japan is a key catch-up trade with earnings growth forecast to rebound to 23% in 2021 and growth broadening out from North Asia to ASEAN.
We are excited about what we call The Next Big Thing, which is about identifying major trends and participating early in their exponential growth. We believe that 5G, healthtech, greentech, fintech themes are must-haves for our clients’ portfolios. Diversifying away from current industry leaders into the next growth areas is important for our clients’ portfolios.
Sustainable Investing is another must-have. We have been early advocates for SI investing and in 2020 we declared our SI mandate as our preferred solution for our clients. We believe that green innovation will bring great opportunities and ESG investing will help screen for better governed companies to invest in. We believe that the Hunt for Yield will continue with low interest rates here to stay for the foreseeable future. Investors can consider enhancing returns via equities, structured solutions and alternative credit in private markets.
UBS My Way: My Way is an innovative, first-of-its-kind creation in the industry.
My Way is more than a product, it offers a whole new client experience by bridging the advisory and discretionary worlds. It is digital and powered by an all new iPad app. It allows our clients, together with your help, to build their own fully personalised portfolios from more than 40 different building blocks and hand over the responsibility of every day investment decisions to some of our best portfolio managers.
With My Way, clients can express their individual investment views, while still ensuring the UBS House View is reflected and their individual risk/return tolerances are retained.
Not only our clients, our client advisors benefit too because we help them work more effectively. Our CAs will now need less time now to prepare documentation on any portfolio changes, the app does it for them.
Investments | What important steps did your bank take to drive the sustainable investing agenda and to increase access to sustainable investing opportunities in 2020?
We have seen strong continuous inflows in sustainable investing strategies globally amid COVID-19. We believe the trend will continue as investors think about how to position their portfolios after COVID-19 and ahead of green-focused recovery spending and regulatory initiatives.
In September 2020, we announced that we have made sustainable investments the preferred solution for our wealth management clients globally.
We manage half a trillion (US$488 billion) in core sustainable assets across the Group.
In WM APAC, the number of clients investing in our fully diversified sustainable portfolio and fund increased by 50% in 2020.
The 100% sustainable cross-asset portfolio continues to be our star offering as UBS is the first wealth manager to offer such kind of portfolio for private clients. It has grown from zero interest to having a share of close to 20% of all mandates in APAC, with APAC AuM sitting above US$1.6 billion today.
UBS Advice Premium: It is the first personaled SI advisory offering in the industry that provides personal sustainability scores and advice based on what is important to each and every client. It covers >11,000 issuers, covering stocks, bonds and funds and it provides full transparency with sustainability reporting.
Research and insights: This year’s Future of… program will publish regular white papers on challenges that resonate strongly with clients and provide associated investment solutions across public and private markets. The first offering in the series, Future of Waste was launched on Feb 2020. The white paper and investment offering present opportunities to mitigate costs and issues associated with waste and target a compelling financial return.
UBS oncology Impact Fund. We raised US$470m for our UBS Oncology Impact Fund, an early stage private equity fund focusing on investments in the development of cancer therapeutics in order to achieve attractive financial returns, while making a positive global impact helping to extend and improve the lives cancer patients, focusing on curing certain forms of cancer. US$275m was committed by our investors here in APAC.
In February 2020, a record US$4 million donation split between the UBS Optimus Foundation and the American Association for Cancer Research was announced in support of innovative research that will accelerate breakthroughs against cancer and to support emerging market access to cancer care. This follows on the back of an earlier donation in April 2018, when the American Association for Cancer Research (AACR) and the UBS Optimus Foundations received US$1.2 million each.
KKR Global Impact Fund launched In September 2019 raised US$225 million from the private clients for the KKR Global Impact Fund as part of a five-year plan to mobilise private wealth for public good. Today, it has so far raised over US$1 billion – very few impact funds have surpassed the US$1 billion mark.
Technology | How is your bank optimising the utility of the relevant digital tools to prepare frontline staff for client engagement in a post-pandemic environment?
Ever since our digitalisation journey in APAC began, the way we work and interact with our clients has transformed. This season has put our platforms such as UBS e-banking, e-trading, UBS Advisor Messaging to the test. We are proud of how they have been arming our client advisors with stability and sustained growth during 2020.
Some examples of our accelerations include:
We bring the scale of our digital platforms into play to ensure our business continues as per usual under the “new normal”. Currently, about 90% of our employees across APAC can work from home with remote access. In light of the pandemic and the need for a more comprehensive remote access platform, we accelerated our plans and launched UBS Workspace, a new platform that enhances our productivity and mobility, months before its original launch date. So far, we have enabled majority of all staff across APAC region to UBS Workspace (including Wealth Management and Investment Bank), to enhance both employee and client experience while meeting all regulatory needs.
UBS Workspace is the new end user platform which allows our staff to access their desktop from any devices, wherever they are. It allows flexible working and improves performance and stability.
Our employees are equipped to meet all regulatory needs through provisioning of UBS Workspace capabilities as part of our Bring Your Own Device (BYOD) strategy. In the matter of a few weeks, UBS Group Technology worked round the clock to migrate an additional 10,000 employees onto UBS Workspace, an enhanced platform that changes the way we work together equipped with new tools for communication, productivity and mobility.
In addition to these technical capabilities, these tools address mobility needs and enable social distancing across our divisions.
We rolled out digital signatures to evidence internal review and approvals, strengthening efficiency to over 20 processes. This digital signature is a first for UBS GWM globally.
We launched Direct Investment Insights (DII), a new capability in our Digital Banking which offer one of the best client experiences with the latest insights, curated from our CIO House views and latest overnight developments, linked to actionable ideas.
We have more upcoming digital accelerations planned and in the works that will enhance our employee experience as we work around the post-pandemic environment.
Meet 2020’s industry leaders in the full round up of of Asian Private Banker‘s The Final Word 2020.