This article appears in the November 2016 issue of Research on Wealth.
Earlier this year, UBS Wealth Management Americas and SigFig, a San-Francisco-based technology company, said they were forming a strategic alliance to develop financial technology for the UBS unit, its roughly 7,000 financial advisors and their clients.
For its part, UBS made an equity investment in SigFig, which also has earned the support of Bain Capital Ventures, Union Square Ventures and others. Meanwhile, SigFig is working on digital tools and services for UBS WMA, and the two firms are jointly creating the Advisor Technology Research and Innovation Lab.
UBS advisors in the Americas help manage more than $1 trillion in client assets, while SigFig’s Enterprise Digital Wealth Management platforms serve investors with about $400 billion in assets.
“It’s a great idea and a very savvy business move for UBS,” given what SigFig can do for it, said Chip Roame, head of Tiburon Strategic Advisors, in an interview.
Sure, SigFig has a robo-advisor service, Roame explains. “But behind the robo is a lot of technology that all advisors should be able to use and to offer their clients, like snazzier user interfaces,” he said. Plus, there is technology that gives clients access to information and services 24 hours a day, seven days a week.
“We’re talking about a series of user-friendly technologies that advisors can give to their clients. That means better customer service and higher client satisfaction,” the consultant explained.
Rich Steinmeier, head of Emerging Affluent and the Wealth Advice Center for UBS — which has about 120 advisors and generally serves clients below the high-net-worth and ultra-high-net-worth segments — and SigFig CEO Mike Sha recently shared their views on what the partnership is all about. The highlights are included here.
Why does the partnership make sense for your firm?
Steinmeier: We took a hard look at the evolution of the fintech space and how there were going to be increasing demands upon us to improve the way that we deliver advice to clients, to make it more broadly accessible, to improve our advisors’ sets of capabilities in delivering advice and in having a broader perspective across our clients’ financial lives, not just in terms of the holdings they have with UBS but broadly to be able to provide advice across their entire wealth spectrum and their entire financial picture.
We realized that we wanted to partner with a player who was leading in the industry in the space, who had the ability to adapt rapidly, to prototype rapidly and to launch incremental capabilities in really short timeframes.
We had a bias toward their being a tech startup that had highly talented engineers and had design and implementation cycles that were measured in weeks, not months.
Sha: As a fintech company, there are a number of things that we really believe will mark the evolution of the industry — and a number of them led us to be excited to work with UBS. One is the idea that there are fintech companies out there trying to compete with financial institutions in the hope that they may put them out of business.
It is our view that in the wealth-management space, the existing players have such important advantages in terms of their size, scale, brand, customer bases, the loyalty and trust [attached to] the brand. These are all very hard for startups to replicate. They take a ton of time and capital.
We believe technology will play an increasing role in the provision of financial advice and doing that work in a partnership with a firm like UBS would actually help us to achieve our mission to help improve the client experience for as many people as possible.
Our view is that providing advice is a nuanced, complicated, emotional and confusing task for a lot of people, and the wealthier you are, the more complicated it gets. We think humans play a really important role in helping clients get the right outcomes.