UBS ADDS ULTRA-WEALTHY BIZ OWNER VIEWS TO CIO RESEARCH
By Danielle Verbrigghe
TheUBSWealth Managementchief investment office has launched a program to glean insight from a clutch of wealthy clients who own or manage private companies across certain industries. The program should yield an additional layer of intelligence about the global economy forUBSand its clients, and boost client engagement, the firm says.
The wirehouse began the program, known as the industry leader network, in March, pulling together a group of about 60 ultra-high-net-worth clients who own or lead private companies in key sectors of the economy, in the U.S. and around the world. The firm plans to cap membership at 100 clients.
“What we are really trying to do here is introduce other indicators that we think are not widely available, and that might provide a sense of where the global economy is going,” says Andrew Lee, deputy head of ultra-high-net-worth and alternatives forUBS’ chief investment office. “We’ve gotten great traction and it has contributed a significant amount to our investment process.”
Membership is limited to high-net-worth and ultra-high-net-worth clients who lead or own companies in the technology, media and telecommunication, consumer discretionary, consumer durables, materials and industrials sectors. Members of the network agree to a monthly call with UBS’ chief investment office to discuss their business, and the implications they see for the broader economy.
UBS’ chief investment office then aggregates the information, and mines it to publish a monthly report on the cyclical direction of industries and regions, available only to network members. The CIO office also uses the information to inform it’s investment process, which also draws on a variety of other internal and external inputs. Individual client information remains confidential, UBSsays.
This program seems to offer a win for both the firm and participating clients, saysAndy Klausner, founder and principal ofAK Advisory Partners.
“I think it’s a good idea to try to get the pulse of what’s going on for [private] companies,” Klausner says.
The program may also be a success in helping retain clients. By engaging wealthy individuals on these topics and including their views in research, clients may be more willing to keep their assets withUBS.
“It’s also a way to engage clients, and I think it makes them feel good to be ask and be included,” says Klausner.
This type of program could also potentially generate some interesting input for the research team, saysScott Welch, CIO ofDynasty Financial Partners.
“You’re going to get some information and insight that’s not widely available, which is helpful,” Welch says.
In addition, the longer-term focus of many private companies, which are less tethered to quarterly results than publicly traded firms, often have more of a longer-term focus, Welch said. That could make information from private sector companies particularly interesting to watch, he says.
“It might be an interesting signal on a longer time horizon,” Welch says.
Another group using information gleaned from its membership base of wealthy investors to deliver insights, isTiger 21. The group surveys members on topics such as asset allocation, investments and economic or market outlooks, sharing the results across the network of ultra-wealthy entrepreneurs and investors.
Knowing how their peers view the market, or are allocating capital, can be very helpful for wealthy investors, saysMichael Sonnenfeldt, founder and chairman ofTiger 21.
For example, “in the worst few days of August and September when people were really testing the courage of their convictions, it was incredibly helpful for me to know that Tiger 21 members, on average, were holding about 12% in cash,” Sonnenfeldt says. “I suspect that every other member who looked at that could then compare their own cash position, and those that were dramatically under 12 may have had good reason to do that, but they had a reference point on the collective wisdom of their peers.”
In addition, Tiger 21 offers peer-to-peer learning sessions, where members share their individual views on solving various challenges, as a valuable tool for ultra-wealthy investors. Those sessions can allow members to get beyond the averages afforded by surveys to find out what other individual members, whom they respect, are thinking, Sonnenfeldt says.
“Our members benefit dramatically from peer-to-peer learning,” Sonnenfeldt says. “Our members don’t want to hear what the average is. They want to pick and choose from those members they respect deeply.”
TheUBSprogram also includes events offering clients the ability to network and learn from their peers. That’s one of the main benefits attracting clients to participate, says Lee.
As part of the program,UBSis also hosting networking events for the private company leaders, allowing them to interact with other private company leaders.UBShosted the first such event in September at a Formula One Grand Prix event near Milan.
“We’ve had great feedback from the clients that have participated both in terms of the ongoing exchange, as well as it’s a great networking opportunity,” Lee says. He says the program has so far generated “fantastic feedback around the caliber of people.”