EXCLUSIVE INTERVIEW: Making A Success In Japan - The UBS Way

Chrissy Coleman

23 May 2013

Editor’s note: WealthBriefingAsia - sister publication to this website - recently interviewed Yuji Watase, managing director, head of markets, wealth management, at UBS’ Tokyo Branch, concerning how the firm approaches the Japanese market - one that has traditionally proven a difficult sector for non-domestic firms to penetrate. Japan is very much on people’s minds at the moment, as illustrated a few days ago when the Yen rose above 100 against the dollar, in response at least partly to the new Japanese administration’s moves to reflate the economy. So how does UBS approach the Japanese wealth management market and what is the bank’s overall strategy?

(UBS, meanwhile, is one of the firms shortlisted to receive an award at the forthcoming WealthBriefingAsia Awards, to be announced in Singapore on 6 June.)

Tell us a bit about your private banking team in Japan?

We opened Tokyo office in September 2004. Osaka office was set up in March 2006 and Nagoya in July 2007.

How many employees in total do you have in the country and specifically, how many relationship manages?

We do not disclose these figures.

What are your views on the existing/potential wealth market?

Japan is the second largest wealth management market after the US, with considerable potential for established, global private banks to bring value. Growing our Japan wealth management business is a priority of UBS globally. Japan’s wealth management market is estimated at SFr6 trillion.

Is there an increasing demand for wealth advice services?

Yes, because the circumstances surrounding wealthy people, such as the tax system, inheritance issues, financial market returns, and more, are changing dramatically.

According to reports, the majority of Japan’s household wealth is in savings – do you see this changing, will there be a shift to investments? Or what is your current observation and prediction?

Generally, Japanese are more cautious about investing in financial products due to their experiences during Japan’s stock market crash back in the 1980s. Having said this, we are seeing a greater shift into investments in line with the new government's economic policies (so-called "Abenomics"). We are seeing for instance more cash shift into real estate or financial products like equities.

What are the challenges in setting up business in Japan?

We would suggest that one of the biggest challenges in the Japanese private banking space is the relative youth of the industry. Wealth management services are new and not widely known or understood in Japan, so much of our efforts necessarily need to focus on explaining the value we bring and on how clients can benefit from our advice and strategy.

What is key to gaining private banking business in Japan? (Word of mouth through existing clients, client events, advertising and hiring local talent.)

Word of mouth among existing clients and new prospects is the biggest key to expanding our business.

From your experience, what is the typical profile of a Japan HNW PB client.

A majority of our clients are entrepreneurs; however our clients also include founder families of large business enterprises, retirees, professionals and the independently wealthy.

A large number of our clients are sophisticated investors, entrepreneurial, and hands-on in their investment decisions. But we also provide advice to clients whose main objective is to preserve wealth.

What services are Japanese clients demanding more of?

Succession planning, because Japan's inheritance taxes are the highest level globally.

What are your plans for UBS wealth arm in Japan?

Wealth management resides at the centre of UBS' strategy. And Japan is strategically the most significant domestic location for wealth management. Our offerings and the potential of the market make wealth management core to UBS Japan's strategy.

UBS is one of the largest and highest calibre multilingual wealth management teams in the region. We are the largest foreign wealth manager in Japan.

Unlike our foreign competitors that are scaling back or closing (such as HSBC and others), UBS views the Japan wealth management market with considerable bullishness over the medium to long term. We see significant potential in the Japan market as a majority of wealthy clients have yet to experience these services.

What sort of targets of growth in assets under management do you have and over what time-frame?

We do not disclose these figures.

Will you be hiring in Japan this year and how many/what areas?

We do not disclose our hiring plans, but we can tell you that we are consistently hiring high-quality client advisors.

A representative of the International Banking Association said a bank can’t call itself global without operating in Japan (in an interview with the Financial Times) – do you agree? Is this the same for private banks?

Of course. This is the same for private banks because Japan is the second largest wealth management market after the US.