At its recent Philanthrophy Forum in Switzerland, UBS spoke to WealthBriefing exclusively about how philanthropy and values-based investing should be, and is becoming, a core client proposition and asset class.

To steer 1.0 per cent of a wealth managers’ client assets into philanthropy and values-based investing may not sound like much to the uninitiated but such an aspiration is big when the manager in question, UBS, has total client invested assets of SFr1.7 trillion ($1.88 trillion).

And making philanthropy-orientated assets part of the core proposition of what UBS does for clients, and part of clients’ strategic asset allocation, is nothing less than a mission for the chief executive of UBS Wealth Management, Jürg Zeltner.

“We are absolutely serious about trying to make a difference. We know about the bond, equity and other markets and we want to be in the same position when it comes to philanthropy,” Zeltner, a 30-year veteran of Switzerland’s largest bank, told WealthBriefing at a recent interview at the bank’s tenth annual Philanthropy Forum in St Moritz. (Your correspondent moderated a panel around “impact investing” issues at the forum.)

UBS hasn’t reached the level where 1.0 per cent of client AuM is used in philanthropy-related areas, but that is the sort of ambition the bank likes to set out, he said.

The Zurich-listed bank, along with other Swiss and international wealth management institutions, hasn’t always been able to shout about this side of its work at a time when policymakers and, of course, the media have focused on the drama stemming from the 2008 financial crisis and pressures on offshore banking. In an industry looking to not just to repair its reputation, but radically change perceptions, UBS’s full-throated commitment to philanthropy makes long-term sense. It is not, of course, the only such institution to make philanthropy an important offering – France’s BNP Paribas, as an example, does something similar with its annual awards and projects; other banks have philanthropy teams, advisors and events to focus on this area.

Momentum

Making philanthropy a core part of what UBS is about could help build on the momentum of a firm that has seen its wealth management operation around the world recover from what has been a difficult aftermath of the 2008 financial crisis. According to its third-quarter results, wealth management in all regions is in profit and assets under management are on an upward track.

Zeltner certainly speaks with the enthusiasm of a man who is also chairman of the UBS Optimus Foundation, which was established in 1999. It opened an Asia-Pacific regional office in Hong Kong earlier this year. (The Optimus Foundation has projects dotted around the globe).

Globally, the UBS Philanthropy and Values-Based Investing team is embedded in the Family Services Group and led by Mario Marconi Archinto. In his 40 man group work amongst others Henry Hirzel, head, family advisory; Silvia Bastante de Unverhau, head of philanthropy practice; Jaume Iglésies is head of values based investing. In other regions, Yan Lau is heading the Asia-Pacific antenna of family services; Christine Tung is a philanthropy advisor, in Hong Kong, and William Sutton, philanthropy advisor, US. The CEO of the Optimus Foundation, meanwhile, is Phyllis Costanza, and Wei Wei is director of Asia, UBS Optimus Foundation, in Hong Kong.

Driving forces

Zeltner pointed out that much of the desire to see more focus on philanthropy is not just driven by the bank – clients have been at the heart of it. Your correspondent could certainly witness a good deal of this potential, and actual, demand judging by the range of issues discussed at the two-day Forum.

Another trend is that philanthropy is becoming an asset class in its own right and being recognised as such. “I have no doubt in my mind that it will. It is a part of a strategic asset allocation,” Zeltner said. “It is a very interesting concept…a frontier that is developing. If we achieve that, it is notable that as a bank we are leading it,” he continued.

“I think this [philanthropy and values based investing] could give us a totally different purpose; it could also be a differentiator for us to attract talent who will see banks as credible actors in a role that substantially contributes to the most pressing issues of our times,” he said.

Zeltner argued – and this was echoed by other figures at the Forum – that the background for UBS’s philanthropy drive is an awareness that with stressed Western welfare states and need for assistance rising, wealthy individuals and organisations in the private sphere need to fill the gaps. Some of those gaps are very close to home, he said. 

“The private sector knows that governments have less money to contribute and yet needs are now bigger,” Zeltner said.

Big inequalities in wealth around the world may be a feature of life, but high net worth must realise that if they don’t help alleviate problems, they could suffer, he said. “The biggest driver of wealth redistribution has been social unrest. Philanthropy has to be a core element of addressing the inequality in wealth distribution and of wealth preservation,” he said.

UBS is an intermediary between people who have money to give and those seeking support. The bank can also provide clients with access to experts in these fields, he said.

“Philanthropy is a core issue for wealthy people; people have wealth in many different forms and many are not aware of the needs of the world,” he said.

What about training relationship managers and their understanding of the issue?

“We are not quite there at the moment where it is a part of client advisors' discussions of every client profile. We are introducing it in 2014 into the investor profile questions and goals,” he said.

As for his own position, Zeltner added that even if he were not directly involved with philanthropy as part of his job at UBS, he would want to get involved. “To manage other people's money is the highest fiduciary standard you can have. If that is true, then my institutional responsibility is even greater and I am part of that business. I have a very privileged role to contribute in what I can do here.”