The fastest-growing consumer phase at UBS in the USA has been “heavier in money than they’ve been traditionally,” John Mathews, head of Personal Wealth Administration, tells ThinkAdvisor in an interview.
That phase is ultra-high web value shoppers, made up of multimillionaires with $100 million and up and billionaires.
Their determination to place apart masses of cash is “about being ready to reap the benefits of strikes within the markets. [Indeed], exercise over the previous few months has actually picked up due to what [these investors] suppose are alternatives [brought by] the market sell-off and even rising rates of interest,” Mathews says.
Therefore, final week — the inventory market’s worst in three months — didn’t significantly faze UBS’ UHNW shoppers. They had been poised to “take benefit” of such “market dislocations,” managing director Mathews says.
He has led the division, with 600-plus personal wealth advisors, since 2013. Beginning out at E.F. Hutton, in 1994 he joined PaineWebber, which was later acquired by UBS.
Within the interview, Mathews, 57, discusses UBS’ UHNW shoppers’ “insatiable demand” for various investments: “To them, it’s outsized returns with out the day-to-day volatility that’s out there,” he notes.
Mathews additionally explores what types of investments household places of work are searching for. Their progress is “exponential,” up from “3,000 about seven years in the past” to greater than “13,500” within the U.S. now, he says.
ThinkAdvisor interviewed Mathews, primarily based in New York, on Monday. He was talking by telephone from Palm Seashore, Florida.
The dialog consists of UHNW shoppers’ curiosity in ESG investing and household places of work which have “dabbled” in crypto, however not by way of UBS: The financial institution has no crypto platform.
UBS serves quite a few households of the 34,500 within the U.S. with a web value of greater than $100 million and “a really excessive proportion” of the 975 billionaires within the nation and all over the world, in keeping with Mathews.
The agency manages $1.7 trillion within the U.S., and the UHNW phase is “a really massive portion” of that, he notes, however reveals no particular AUM.
Listed here are highlights of our interview:
THINKADVISOR: What are ultra-high-net-worth shoppers most involved about at the moment?
JOHN MATHEWS: Earlier than the pandemic, what was on their minds was “Let’s become profitable within the markets.” In the course of the pandemic, the main target went from investments to creating certain their life was so as — their belief and property, succession planning [and so on].
However in 2022, they flipped again to specializing in “Do I’ve the fitting investments in place?”
Did they get upset final week when the market plummeted?
No. They’re very opportunistic buyers. So when there’s a dislocation within the markets, the ultra-high-net-worth buyers [multimillionaires and billionaires] are often benefiting from these large strikes.
Our UHNW shoppers have stored a big portion [of their assets] in money. Most UHNW buyers have been heavier in money than they’ve been traditionally. That offers them an opportunity to reap the benefits of market dislocations.
What’s that particular technique?
I feel it’s a brand new time now the place these shoppers will preserve money on the sidelines to have the ability to deploy it [in a market downturn] after they suppose there are alternatives.
Often it’s not broad-based like “Let’s make investments it within the S&P.” It’s “Let’s be very particular in what we expect will work.” It may very well be personal fairness or a hedge fund.
Exercise over the previous few months has actually picked up with our shoppers due to what they suppose are alternatives [brought by] the market sell-off and even rising rates of interest.
We’re seeing shoppers now saying, “Mounted revenue is definitely enticing.”
How a lot emphasis do UHNW shoppers placed on company earnings?
A minority may be very concerned, together with some household places of work. However the others have a plan in place and don’t fear in regards to the day-to-day fluctuations and earnings reviews which are talked about on TV.
They’ve created a portfolio that’s sturdy; if [a corporation] has dangerous earnings, it creates a chance. They’ve the liquidity to reap the benefits of it.
Have various investments change into extra necessary to the UHNW?
Sure. It’s alternate options, alternate options, alternate options. Our shoppers have an insatiable demand for them throughout your entire spectrum, from personal fairness to hedge funds.
They’re snug with the liquidity premium of a personal fairness fund. They perceive it’s nine- or 10-year cash, however they’re snug with the potential outsize returns that go together with that.
Many have constructed their wealth in personal fairness to some extent: They personal their very own enterprise, for instance. So to them, it’s outsize returns with out the day-to-day volatility that’s out there.
Our common consumer’s various [investment] balances proceed to develop yearly and much more so this yr.
Do the UHNW put money into crypto?
Not by way of us, as a result of we don’t have a crypto platform, although I’ve observed that, particularly within the household workplace area, many have dabbled in crypto primarily as a result of they don’t wish to be left behind probably, I assume. However they’re skeptical as properly.
So why do household places of work trouble to put money into it?
It’s their job to ensure they diversify the wealth of the household, and so they view crypto as probably the subsequent factor — and so they don’t wish to miss out.
They’ve some form of allocation, however often not that enormous. They’ve sufficient wealth the place they will diversify into it — and in the event that they’re incorrect, they’re incorrect. It’s not that large a deal.
To what extent are household places of work rising?
Exponentially. It’s accelerated progress. It’s estimated that there are over 13,500 household places of work within the U.S. at the moment, up from 3,000 about seven years in the past.
There’s large progress in each the single-family workplace and the multi-family workplace. They’re searching for bespoke one-off sorts of investments. They’re heavy in personal fairness, primarily in direct participation of buying companies.
In working with our household places of work, half the discussions are on funding alternatives; the opposite half is on belief, property, philanthropy, succession planning and academic applications for relations.
Do UHNW shoppers do retirement planning?