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December 16, 2016updated 04 Apr 2017 1:20pm

UBS’s SmartWealth is a ‘hybrid model’ commitment that more private banks need to make

Swiss private banking giant, UBS, has announced the launch of SmartWealth in the UK in 2017, which is a step towards bridging the knowledge and advice gaps that exist in the wealth market. It can certainly be a game changer for the UK wealth management industry, writes Meghna Mukerjee

By Meghna Mukerjee

Swiss private banking giant, UBS, has announced the launch of SmartWealth in the UK in 2017, which is a step towards bridging the knowledge and advice gaps that exist in the wealth market. It can certainly be a game changer for the UK wealth management industry as it will represent a true hybrid, low-cost platform being launched by a global private banking giant. 

With SmartWealth individuals with investable assets of GBP15,000 can become customers, including clients opening a new ISA or transferring their existing ISAs to UBS. This is a drastic departure from their $1m in investable assets entry point so far. However, such a departure has become necessary in the current climate where online-only platforms are fast gaining popularity and customers.

High cost of advice has been blamed for the existent advice gap and there has been a push in recent months to offer cheaper and simpler services to the mass-affluent and even affluent customers.

Several private banks, so far, have strongly denounced threats from robo-advisory firms, claiming that online-only algorithms do not have the ability to satisfy big-ticket customers who are relationship-driven. However, players such as Nutmeg in the UK and WealthFront and Betterment – to only name a few – in the US have given banks a lot to think about, creating easy alternatives for wealthy clients.

With competition between banks getting tougher and profit margins being squeezed, private banks need to evolve according to market and client demands to gain more wallet share.

With SmartWealth, UBS is committing to the hybrid model that combines technology with human insight, and opening their services up to a whole new client segment. It is also a refreshing take on Personal Financial Management (PFM) tools that have taken a while to come of age in wealth management. At the Private Banker International Switzerland Conference held on 8 December in Zurich, Paul M. Raphael, head of wealth management, Europe and emerging markets for UBS, said SmartWealth was a platform that represents the bank changing with evolving times. 

Barclays Wealth & Investment Management (I&IM) has also launched a new integrated online direct investing platform combining its online banking and investment services to address the savings and investing knowledge gap. The platform has one fee and one transaction charge, is free from common charges including exit fees, has no minimum investment amount, and allows its customers to see their investments, savings and current accounts through a single log-in.

These platforms are steps in the right direction for the wealth management community. There is, certainly, an underserved segment that is not keen to over-pay but needs investment management services. UBS and Barclays W&IM have shown that they are paying attention. Now more private banks need to take note.

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