UBS' Digital Wealth Mgmt Focus is 'Spot On:' Analyst

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UBS’ choice to roll out its own digital wealth management service in the U.S. rather than acquire one will likely save it money, while its chief executive officer’s previous experience suggests it has the right leadership to succeed against its U.S. competition in tapping the affluent market in this country, analysts say.

Last month, UBS CEO Ralph Hamers announced that the company was developing a digital advice service aimed at U.S. individuals with up to $2 million in investable assets, as reported. The service, which the company expects to launch toward the end of 2022, will at first focus on around two million plan participants UBS serves through its workplace corporate stock plan and retirement business in the U.S.

Analysts believe that UBS is poised to succeed in its digital push, according to S&P Global Market Intelligence.

“We believe UBS’ focus on digital wealth management is spot on,” said Firdaus Ibrahim of CFRA Research, according to the publication. “UBS’ franchise strength and good historical performance will also give comfort to clients who are going digital.”

The U.S. market already has “fantastic opportunities” due to the estimated $30 trillion wealth transfer and the expected consolidation of the wealth management space, according to Sean McKee, national practice leader for public investment management with KPMG in the U.S., Market Intelligence writes. And UBS’ Americas business, which reported $559 million in operating income in the third quarter, already makes up the largest part of the Swiss-based firm’s global wealth management operating profit, according to the publication.

To be sure, UBS will face competition from established American wealth managers such as Morgan Stanley and Bank of America, which have far larger market share, Market Intelligence writes.

But Nicolas Payen, an equity research analyst with Kepler Cheuvreux, believes that UBS’ plan to roll out a digital offering on its own will let the company scale in the U.S. while avoiding the costs associated with an acquisition of a digital broker, according to the publication. Morgan Stanley, for example, acquired online brokerage E*Trade in a bid to reach millennials, Market Intelligence writes.

Ibrahim also believes that UBS’ CEO has the experience to see the digital push through, according to the publication. After all, as CEO of ING Groep, Hamers was seen as key to the Dutch bank’s digital transformation that saw its users’ mobile interactions soar, Market Intelligence writes.

“We believe Ralph has done exceptionally well in terms of digitalization initiatives during his time at ING,” Ibrahim said, according to the publication. “[T]his bodes well from the infrastructure side.”

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