At its recent Philanthropy Forum in Switzerland, UBS spoke to sister publication WealthBriefing exclusively about how philanthropy and values-based investing should be, and is becoming, a core client proposition and asset class.

To steer 1.0 per cent of a wealth managers’ client assets
into philanthropy and values-based investing may not sound like much to the
uninitiated but such an aspiration is big when the manager in question, UBS,
has total client invested assets of SFr1.7 trillion ($1.88 trillion).

And making philanthropy-orientated assets part of the core
proposition of what UBS does for clients, and part of clients’
strategic asset allocation, is nothing less than a mission for the chief
executive of UBS Wealth Management, Jürg Zeltner.

“We are absolutely serious about trying to make a
difference. We know about the bond, equity and other markets and we want to be
in the same position when it comes to philanthropy,” Zeltner, a 30-year veteran
of Switzerland’s largest bank, told sister WealthBriefing
at a recent interview at the bank’s tenth annual Philanthropy Forum in St
Moritz. (Your correspondent moderated a panel around “impact investing” issues at the forum.)

UBS hasn’t reached the level where 1.0 per cent of client
AuM is used in philanthropy-related areas, but that is the sort of ambition the
bank likes to set out, he said.

The Zurich-listed bank, along with other Swiss and
international wealth management institutions, hasn’t always been able to shout
about this side of its work at a time when policymakers and, of course, the
media have focused on the drama stemming from the 2008 financial crisis and
pressures on offshore banking. In an industry looking to not just to repair its
reputation, but radically change perceptions, UBS’s full-throated commitment to
philanthropy makes long-term sense. It is not, of course, the only such
institution to make philanthropy an important offering – France’s BNP Paribas, as an example, does something similar with its
annual awards and projects; other banks have philanthropy teams, advisors and
events to focus on this area.

Momentum

Making philanthropy a core part of what UBS is about could
help build on the momentum of a firm that has seen its wealth management
operation around the world recover from what has been a difficult aftermath of
the 2008 financial crisis. According to
its third-quarter results, wealth management in all regions is in profit and
assets under management are on an upward track.

Zeltner certainly speaks with the enthusiasm of a man who is
also chairman of the UBS Optimus Foundation, which was established in 1999. It
opened an Asia-Pacific regional office in Hong Kong
earlier this year. (The Optimus Foundation has projects dotted around the
globe).

Globally, the UBS Philanthropy and Values-Based Investing
team is embedded in the Family Services Group and led by Mario Marconi
Archinto. In his 40-man group work amongst others Henry Hirzel, head, family
advisory; Silvia Bastante de Unverhau, head of philanthropy practice; and Jaume
Iglésies, head of values-based investing. In other regions, Yan Lau is
heading the Asia-Pacific antenna of family services; Christine Tung is a
philanthropy advisor, in Hong Kong, and William Sutton is philanthropy advisor,
US. The CEO of the Optimus Foundation, meanwhile, is Phyllis Costanza, and Wei
Wei is director of Asia, UBS Optimus Foundation, in Hong
Kong.

Driving forces

Zeltner pointed out that much of the desire to see more
focus on philanthropy is not just driven by the bank – clients have been at the
heart of it. Your correspondent could certainly witness a good deal of this
potential, and actual, demand judging by the range of issues discussed at the
two-day Forum.

Another trend is that philanthropy is becoming an asset
class in its own right and being recognized as such. “I have no doubt in my
mind that it will. It is a part of a strategic asset allocation,” Zeltner said.
“It is a very interesting concept…a frontier that is developing. If we achieve
that, it is notable that as a bank we are leading it,” he continued.

“I think this [philanthropy and values-based investing]
could give us a totally different purpose; it could also be a differentiator
for us to attract talent who will see banks as credible actors in a role that
substantially contributes to the most pressing issues of our times,” he said.

Zeltner argued – and this was echoed by other figures at the
Forum – that the background for UBS’s philanthropy drive is an awareness that
with stressed Western welfare states and need for assistance rising, wealthy
individuals and organizations in the private sphere need to fill the gaps. Some
of those gaps are very close to home, he said. 

“The private sector knows that governments have less money
to contribute and yet needs are now bigger,” Zeltner said.

Big inequalities in wealth around the world may be a feature
of life, but high net worth must realize that if they don’t help alleviate
problems, they could suffer, he said. “The biggest driver of wealth
redistribution has been social unrest. Philanthropy has to be a core element of
addressing the inequality in wealth distribution and of wealth preservation,”
he said.

UBS is an
intermediary between people who have money to give and those seeking support.
The bank can also provide clients with access to experts in these fields, he
said.

“Philanthropy is a core issue for wealthy people; people
have wealth in many different forms and many are not aware of the needs of the
world,” he said.

What about training relationship managers and their
understanding of the issue?

“We are not quite there at the moment where it is a part of
client advisors' discussions of every client profile. We are introducing it in
2014 into the investor profile questions and goals,” he said.

As for his own position, Zeltner added that even if he were
not directly involved with philanthropy as part of his job at UBS, he would
want to get involved. “To manage other people's money is the highest fiduciary
standard you can have. If that is true, then my institutional responsibility is
even greater and I am part of that business. I have a very privileged role to
contribute in what I can do here.”