Full Steam Ahead for UBS Wealth Management in Asia

lachlan Colquhoun

16 July 2007

UBS is a leading player in Asia-Pacific wealth management and plans to stay that way: that is the strong message from the bank’s Kathryn Shih. Ms Shih, the head of UBS wealth management for Asia Pacific, describes the region as a “huge and fast growing pool of wealth” and says UBS is committed to growing its business. “The wealth pool in the region is growing at 9.7 per cent per annum – ex-Japan - so it is huge, and today we see that amongst wealth management players that only around 10 per cent of the target market are with the major players. “That means that 90 per cent are outside the hands of major players so there is much upside for wealth management,” she told WealthBriefing. While UBS is well established in the region, Shih says the bank’s awareness of moves from competitors and its own ambitions for growth mean that it is not standing still, as recent moves show. In Japan, for example, the bank recently expanded its presence with the establishment of a third wealth management office in Nagoya in central Japan, a town with a wealth pool comparable to that of Spain. UBS also has ambitions in Taiwan, where it is expanding its business outside of capital Taipei and is aiming to snatch a 10 per cent share of the high net worth market within the next seven to ten years. In South Korea, meanwhile, UBS paid $162 million for majority control of the country’s third largest asset manager, Daehan Investment Trust. The UBS Securities joint venture will open six branches in China in the latter part of this year, while the bank is also in the queue for a branch licence in India, from which it will be able to offer wealth management services. And in April, UBS opened its wealth management campus in Singapore, aimed at breeding a new breed of highly skilled private bankers and easing the problem of talent shortage which is hindering the industry’s growth. ‘The academy has already been very successful,” says Ms Shih. “And it sends a very important message to the market that we believe in training, and that our people can be the very best in the industry because we invest in training.” UBS has been at the centre of the talent war in Singapore, and Shih admits the bank has been “doing quite well in attracting talent”. “The skill shortage is a reality but we are also creating new talent in the market,” she says. “We are recruiting people from non-wealth management backgrounds, and this year for example we will be recruiting about 80 associates with between three and five years experience, not necessarily from a finance background. “So we will give them a one year background in wealth management and advisory, in financial planning and all the skills they need, and we will rotate them through the firm and start them off with a book and help them to be successful.” UBS, she says, has a “huge advantage” already in the region by virtue of its existing infrastructure. The bank sees itself as a leader, not a “niche player,” and wants to focus on several different market segments, “not just one.” “This is why we are becoming more and more specialised,” says Ms Shih. “The traditional way was to hire a person who could find out the right contacts, either by personal connections or by a previous experience but today, by being very focused on different groups of clients you start to create a data base, and then you can tailor your services to them and deliver. “This means that in any key client area we have identified our clients and have a better understanding of them even before we call them, and that gives us a better chance of success.” Asian wealth, however, is very different in its characteristics from that in Europe or the US. “One feature of Asia is the fast growth in wealth, and a lot of it has been created either in the last five decades or even in the last decade,” says Ms Shih. “Our clients in the past have made money by taking risks in their businesses, so they are usually more willing to take on risk, and they are willing to look at new products.” But even within Asia there are significant differences, which are often the result of differing tax regimes. “In jurisdictions like Hong Kong and Singapore, which are low tax, that drives how people invest,” says Ms Shih. “In Hong Kong they invest without consideration for taxes because there’s no tax on investment income whereas in Australia you would plan your investments on a net after-tax baisis.”