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UBS to Merge US, Global Wealth Units

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UBS Group AG said Monday that it is merging its financial advisors in the Americas with those outside the continent, creating a Global Wealth Management unit with about 10,600 FAs and close to $2.7 trillion in client assets worldwide.

The business will be launched on Feb. 1 and be led by Martin Blessing, president of Wealth Management, and Tom Naratil, president of UBS Americas and Wealth Management Americas.

“Two years ago, we began to more closely align the divisions, and today’s announcement reflects our continued evolution,” said UBS Group AG CEO Sergio P. Ermotti, in a statement. “It will mean improved efficiency, more sharing of best practices, greater returns on our investments and enhanced client service.”

The move has earned UBS a thumbs-up from wealth management consultant Chip Roame, head of Tiburon Strategic Advisors. “An integrated business is the future!” Roame told ThinkAdvisor

UBS is “a strong player” beyond the U.S., Roame points out, and the number of its non-U.S. FAs surpasses other wirehouses (Merrill Lynch, Morgan Stanley and Wells Fargo). 

The non-U.S. wealth managers have bigger average books of businesss and higher margins than their U.S. counterparts, he adds, and that means there is room for the Americas’ advisors to learn from their global best practices.

By the Numbers

The Wealth Managemeent Americas advisors had average yearly revenue (fees and commissions) of $ 1.23 million and $180 million in average client assets. 

Morgan Stanley’s advisors had average yearly sales of $1.12 million as of Dec. 31 vs. $1 million for Merrill’s Thundering Herd; Merrill’s veteran advisors, though, produced $1.31 million. Morgan Stanley says the average level of assets per advisor is $151 million, while Merrill doesn’t provide that figure.

In the Americas, UBS’ advisor headcount was 6,822 at the end of the 2017, down 1% from the earlier quarter’s 6,861 and off 3% from 7,015 in the year-ago period. Loans to recruited advisors fell 14% to $2.6 billion in the quarter versus $3.0 billion a year earlier.

Net outflows were $500 million in the final quarter of 2017. When interest and dividend income are included, net inflows totaled $9.4 billion. Client assets expanded 11% year over year to nearly $1.3 trillion.

The Americas group improved net income before taxes 9% year over year and 11% consecutively in the quarter on an adjusted basis to $390 million. Its full-year profit was almost $1.4 billion.

Wealth management outside the Americas — which includes 3,794 financial advisors — had 14.2 billion Swiss francs in net new assets in the fourth quarter. Total client assets grew 16% year over year to 1.34 trillion Swiss francs, or roughly $1.4 trillion.

The unit boosted net income before taxes 25% from the year-ago period, including adjustments, but down 9% from the earlier quarter. Its advisor headcount dropped 2% from a year ago and 1% from the prior period.

UBS says the combined business should help it save costs — via its combined purchasing power of 2.3 trillion Swiss francs in invested assets — and improve its technology. “Regional variations in the client service model will be maintained, while middle- and back-office functions will be more closely aligned and integrated,” the company said in a statement.

The bank will report results for the combined units for the first quarter of 2018. For the unit, it is targeting 10% to 15% yearly adjusted growth in profits before taxes and 2% to 4% annual net new money growth for 2018-2020.

— Check out A Top UBS Advisor Looks Ahead to 2018 on ThinkAdvisor.


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