INTERVIEW: UBS Unites Its Wealthiest US Clients In "Safe Haven" Forums

Eliane Chavagnon

20 May 2013

Over the past decade UBS has organized a number of programs internationally for its most sophisticated and wealthy clients to encourage what it describes as the “cross-pollination” of ideas on a range of wealth management issues.

The Zurich-listed firm launched its family office forum to US clients three years ago, introduced a young successors program two years ago and held the inaugural women’s symposium this March.

Looking at the latter two in more detail, UBS’ Steven Schroko, Judy Spalthoff and William Sutton recently spoke to Family Wealth Report about the rationale behind the forums and what trends they are seeing.

“What we’ve been trying to do here for the last several years is bring together the community of our most sophisticated, wealthy clients,” said Schroko, head of client development within private wealth management and the wealth management advisor group.

“They do not necessarily have venues to cross-pollinate and we’re finding more and more that our forums give them a very safe haven to do that,” he said.

UBS recognizes that as its ultra high net worth clients move through the different stages of life, their personal and financial priorities will often shift in ways that they aren't fully prepared to tackle.

“What we’re hoping to do here at UBS is not just host two events - one for women and one for young successors - but really make this part of practice management and help our advisors develop their understanding of these two segments, educating them on the different generational issues and preferences between the genders,” Spalthoff said. Spalthoff is head of business development within private wealth management and the wealth management advisor group.

The young successors program gathered 30 young adults representing 27 families with an average net worth of $1.42 billion and total assets at UBS of $994.6 million. Held in New York, the event focused on deconstructing investment products, wealth management, philanthropy, legacy and succession.

Set up

The events are split between building relationships with advisors and “getting into more intimate conversations as a small group,” Spalthoff said.

“We don’t try to sell anything,” Schroko added. “This is really a gift we are giving to our clients in a sense that we just want them to be enlightened by not only our intellectual content but by the other participants.”

But the firm is “very specific” about who it brings to the forums. Attendees are nominated and then a guest list is created, he explained. The relatively small size of the group of attendees makes it easier for people to get to know one another in a less overwhelming environment.

Also of note, an additional day of “boot camp” is offered to those without a strong background in finance. The importance of this is evident when considering recent findings highlighted in a report called Tapping Into The Mindset Of Wealthy Millennial Investors, by Bank of America.

It found that 56 per cent of millennial investors describe themselves as “moderately knowledgeable” regarding financial investment information, while just 19 per cent believe they are highly knowledgeable and 25 per cent admitted to having “very little” knowledge.

Trends

In terms of trends, Sutton, who heads up UBS’ philanthropic services in the US, said philanthropy is an area that is “really interesting” to young donors. “It’s what they care most about and quite often have grown up doing in multiple ways.”

Sutton also observes that young donors are more focused on “values and not so much on valuables,” with most also “strongly influenced” by their parents.

“But while they honor the legacy, they feel differently about it,” he said. “They are giving more on strategy, measuring and focusing and, most importantly, making an impact right now.”

Schroko also highlighted that while some attendees are advanced in their philanthropic passions, others are just starting out. “Those that are truly inspired help make the people who are just burgeoning in this area think - and they challenge each other,” he said.

According to Schroko, two of the main areas of discussion among those in the young successors program relate to: deciding whether or not to join a family business and prenuptials. But they also talk about “standing on their own two feet” and “building a personal brand,” Spalthoff added.

Interestingly, BoA’s report found that while many millennial investors believe their investment approach aligns closely with that of the previous generation, less than half actually discuss financial matters with their parents.

Echoing this, Spalthoff gave the example of how the parents of one previous attendee were “super engaged” in one area of philanthropy, but that she too was very “philanthropically inclined” and wanted to find her own personal cause. “We coached her on how to have those conversations with her parents,” Spalthoff said.

She added: “Financial advisors need to be respectful of their personal preferences and what they want to do, and not just attach them to the patriarch and what dad wants or what the husband wants.”

For example, Michael Liersch, director of behavioral finance at Merrill Lynch Wealth Management, previously told this publication that younger investors want their investment process to reflect what matters to them.

“I think a lot of the time they feel that the investment process reflects investments, which they don’t necessarily feel connected to or regard as personally meaningful,” he said .

Schroko believes that a growing number of firms are “jumping on the bandwagon,” launching forums and hosting events as a way for clients to discuss issues they may have and share insights.

“We are all here to make that connectivity even stronger,” he said. “I’m sure that that trend will continue.”