NEW YORK (Reuters) - UBS AG UBSN.S aims to triple the assets that its U.S. wealth management clients keep in fee-based accounts within seven to 10 years, a top executive said on Tuesday.
Like rivals such as Morgan Stanley (MS.N) and Bank of America’s (BAC.N) Merrill Lynch Wealth Management, UBS Wealth Management Americas is moving “up the chain” of wealthy investors to pull their money to its asset management platforms, said Paul Hatch, who oversees products and services sold by UBS Wealth Management Americas’ 7,000 brokers.
“We have to get further and further from the mass affluent space, and, some people would say, even from the high-net-worth space to the ultra-high-net-worth,” Hatch, a group managing director, told mutual fund sales executives at a conference sponsored by Financial Research Associates.
In securities industry jargon, “mass affluent” generally describes clients with $250,000 (£159,557) to $1 million of investable assets, “high net worth” to those with $1 million to $10 million and “ultra high net worth” to those in higher spheres. Brokerages say fee-based accounts are more lucrative and consistent than traditional commission accounts.
To compete with private banks and legions of other firms jockeying for money from the super-wealthy, brokerage firms tell advisers to work more intensely with the rich by offering broad planning services as well as investment advice, and using technology that is too expensive to deliver to the less wealthy.
The emerging model is modifying the way brokers work. UBS has five “dominant super-teams” - with 60 to 70 employees comprising up to 20 brokers as well as investment analysts and specialists in areas such as retirement and estate planning. Each team has discretion to invest more than $1 billion of client assets. Within five years, UBS wants 100 such super-teams, Hatch said.
It also has work to do on fee-based accounts, which hold about 33 percent of client assets today, or about $330 billion. The goal is to grow fee-based assets to $1 trillion, or 50 percent of client assets, within seven to 10 years, Hatch said.
Merrill Lynch’s clients had 29 percent of their assets in fee accounts at the end of the third quarter. The total reached 38 percent at Morgan Stanley, the biggest brokerage firm with more than 16,000 advisers.
Despite its goals, UBS still pays brokers on accounts with as little as $100,000, a spokesman said.
Reporting by Jed Horowitz; editing by Gunna Dickson