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Financial Planning > Tax Planning

UBS: Clients Need More Than Investment Advice

By Michael S. Fischer

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In the competition for clients, UBS Wealth Management Americas is focusing on the high-net-worth and ultrahigh-net-worth segment, where it sees the biggest growth opportunity.

The firm is also looking to bring the children of its clients into the fold, Jason Chandler, the head of the firm’s wealth management advisor group, said in a press briefing Wednesday.

UBS’ strategy is to offer advice beyond investing, Chandler said. Clients want objective advice on a wide range of issues from someone they trust.

“Families today want holistic services,” he said.

In order to ensure that its financial advisors meet this challenge, UBS is recruiting the best talent it can find and pouring resources into educating and training.

Permanent Changes

UBS Wealth Management is changing because investors have changed, and these shifts have become permanent, according to Emily Pachuta, head of client marketing and Investor Insights.

Consider that wealthy investors, irrespective of age, currently hold 20% to 25% of their portfolios in cash. “They use it as a security blanket,” Pachuta said, “and this allows them to engage in the markets.”

Moreover, risk has been redefined, with investors now seeing a loss of assets as permanent. “Financial advisors must understand their clients’ fear of volatility,” the prospect of losing their money forever, she said. Protecting assets is a critical concern.

For boomers, long-term care has become their No. 1 concern. “It far trumps retirement and other issues,” Pachuta said. Boomers are seeing the effects of long-term health needs among their family and friends. They are worried, but often at a loss for what to do.

Retirement, which was the chief concern 15 years ago, has evolved as an issue. Boomers no longer see retirement as a single phase, Pachuta said.

Rather, they now view it in three distinct phases, which could extend over several decades: An active period of work or volunteering, a period of travel and leisure, abd a period of decreasing independence and increasing health issues.

Financial advisors must be prepared to help clients meet the income needs of each phase, she said. Retirees are concerned about outliving their assets.

Millennials present different issues—and are a keen focus of UBS Wealth Management, Pachuta said.

Working with the children of its current clients adds value to the client relationship, she said, because parents are very concerned about their children’s future.

At the same time, millennials are just as concerned about their parents, having witnessed the often devastating toll the financial crisis of 2008 took on themselves and their families.

“They make good clients,” Pachuta said.

For one thing, they are savers. She likened millennials’ mentality to that of the generation that emerged from the Great Depression.

Millennials are also skeptical of long-term investing. This means financial advisors have to provide basic financial education, she said, pointing out that 52% of millennials her firm surveyed were in cash, compared with half that rate for all investors.

Millennials’ risk tolerance, again, reflects their Depression-like conservatism. In contrast, Pachuta noted, Gen X investors had the greatest risk tolerance.

“Millennials are not trying to beat the market,” she said. “They want to meet their planning goals.”

They want advice. Although they are “digitally obsessed” and always seeking information online, millennials know they can’t get advice online, Pachuta said. Instead, they turn to the family and friends.

UBS can leverage existing relationships with their parents and provide that, she said.

Holistic Advice

UBS is training its new generation of financial advisors to deliver services in eight areas, David McWilliams, head of wealth management transformation, said.

Clients, whose average age is in the 50s, can expect to receive the following from financial advisors:

  • Tax advice
  • Estate planning
  • Investment advice
  • Retirement planning
  • Insurance, with a particular focus on long-term care
  • Lending
  • Education modeling
  • Net worth statement

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