UBS has said that clients are shifting money to be managed directly by the bank or pay for advice after it revamped services to increase profitability.
The mandates business had cumulative net inflows of more than CHF20 billion (US$23 billion) in 2012 and the first nine months of this year after customers pulled about CHF15 billion in the previous two years, chief investment officer Alexander Friedman and William Kennedy, who heads the unit that manages the business, said in a interview to Bloomberg.
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UBS is focusing on wealth management to increase its earnings adding that its mandates business accounted for 22% of assets with about CHF190 billion at the end of September, that the bank manages for wealthy clients outside of the Americas.
Kennedy said that UBS’s gross margin on mandates exceeded 100 basis points on average as of the end of September when compared with a target for gross margins of between 95 basis points and 105 basis points for the entire wealth management unit outside the Americas, which is led by Juerg Zeltner.
UBS’ assets under management in discretionary mandates were up by 15% in the 20 months through September, while those in advisory mandates increased to 60%.
"Our goal is to at least double total assets in mandates. For the vast majority of our clients, their financial performance is significantly better when they’re in a mandate versus self-directed," Bloomberg quoted Friedman as saying.
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