Bob McCann, chief executive of UBS’ Wealth Management Americas, set out some ambitious targets today for the brokerage’s unit—including turning around client asset flows and boosting capital. He also reiterated his profitability target of 15 to 20 percent for the division, and set a goal of CHF1 billion for annualized pre-tax profit.
Signaling some other substantial challenges ahead, McCann said there had been a lack of “disciplined leadership” in the wealth management unit – as well as a lack of “pragmatic planning” or “culture of execution.”
“Make no mistake about it, there is significant work to be done to improve this business,” McCann told the UBS Investor Day 2009 event hosted in Zurich. “But we have good people and we are going to add to the number of good people [at the firm.]”
UBS Wealth Management Americas had 7,286 financial advisors at the end of the third quarter, down from 7,939 at the end of June, according to a spokeswoman for UBS.
McCann also spoke of the division’s cost/income ratio, which he would like to bring down from its current 99 percent ratio to between 80 and 85 percent within six to 12 months. This would require the wealth management group to stem the outflow of client assets and begin gathering net new assets again.
Analysts says McCann’s target are reasonable. But they say the new CEO of the division has much work to do, including repairing the damage done to UBS’s reputation by the international tax scandal, even as market conditions move in McCann’s favor.
Some say that to really build the business, McCann will have to lure brokers and assets from rivals. “It is a scale business,” Alois Pirker, wealth management research director at Aite Group told Registered Rep. “Your profit margins come from having more assets on the same platform.”
While he admitted the challenges ahead are numerous, McCann also sounded positive notes, telling his audience, for instance, that “invested assets” per advisor at UBS are now about even with the industry leader, which he did not cite by name. “That’s not a bad place to start,” he added.