The great divide

The boundary between advice and product in the realm of financial planning has al­ways been difficult to guard, and easy to cross over.

Late in 2006, the government even tried to broker a solution to this border crisis by suggesting the establishment of a new category of “product sellers” as distinct from “financial advisers”. The idea appealed to many advisers as a way to mark out the new territory of professionalism.

UBS Wealth Management has sought within its own operations to draw a clear distinction be­tween the two, often-conflicting, regions of product and advice.

Zoe Hart, head of wealth planning at UBS, says the group’s financial planners (or “wealth plan­ners” as the group describes them) stay strictly on neutral ground, and never stray into product terrain when working with clients.

The Swiss-headquartered institution has adopted this structure globally.

Essentially, UBS wealth planners map out risk-appropriate asset allocation strategies, leaving client advisers to fill in the product details.

The wealth planners monitor the actual invest­ment portfolio to ensure it meets the asset alloca­tion goals, and discuss any divergence with client advisers. But they remain aloof from any specific product selection.

Client advisers (there are about 160 of these in Australia) also generate and maintain the client base over the long term.

Hart says the UBS wealth planners supply a service of “a technical specialist nature” to the client advisers, who only refer clients on when a need has been identified.

In fact, she says the UBS wealth planners “will walk out of the room” when the subject of actual product selection comes up in joint meetings with UBS client advisers.

“We…provide specialist financial planning advice to both prospective and existing clients of UBS Wealth Management, which is completely independent of investment and other product selection,” Hart says.

“This is one extreme differentiator from our market competitors.”

UBS targets high net worth individuals, which means those with at least $1 million to invest. However, Hart says UBS Wealth Management clients have $20 million-plus to invest.

Wealth planners can work across many areas such as “appropriate structuring of financial affairs to maximise the opportunities for meeting personal financial and lifestyle objectives and maximising wealth”, Hart says.

“We also educate our client base on changes in legislation, additional investment opportunities (including charitable structures and pursuits) and introduce specialist internal and external resources to support the client and the client’s financial affairs and needs,” she says.

Hart says the UBS wealth planners are not remunerated for referrals, and clients are not pres­sured into taking up any of these extra services.

“Most of our clients already have advisers in other areas,” she says.

Hart says the firm’s international presence sets it apart from its competitors.

“The service offering is relatively seamless across jurisdictions – this has the added benefit of Australian advisers and consultants, including wealth planners, being able to work closely with our counterparts in other countries," Hart says.

UBS does not disclose its specific client num­bers or funds under management but Hart says the Wealth Management division in Australia has about 10,000 relationships and the group manages more than $100 billion of high-net-worth clients’ assets in the Asia Pacific region.

Currently nine UBS wealth planners are servic­ing the firm’s Australian client base and while Hart says there is room for more in the group, its hiring policy remains very selective.

She says UBS takes a “lateral recruitment” approach to hiring financial planners and will often look outside the traditional industry – three UBS wealth planners have a legal background, for example. Part of the reason for this strategy is that many established financial advisers are reluctant to shed their existing client base when shifting licens­ees – a necessity in the case of UBS.

“But we have had a couple of advisers who sold their client book because they wanted to come across to a well-resourced organisation,” she says.

Hart says UBS provides “massive” training and support to its planners – more than enough to guar­antee they can stay on the right side of the great advice/product divide.