As first announced by Muckle last October (UBS joins robo fray) UBS has now gone live with its SmartWealth digital wealth management platform, providing regulated and real-time advice online.
Benefitting from UBS’ massive wealth management capability, SmartWealth delivers an investment strategy based upon an individual’s financial situation, attitude to risk and overall objectives; five different strategies are offered – fixed income, yield, balanced, growth and equity – according to the required level of risk.
Speaking at the recent Robo-investing Europe 2017 conference Shane Williams, co-head of SmartWealth, said that its complete digitalisation is a feature of the solution, and despite promises of a sausage factory of offerings from the banks, UBS’s launch makes it a very early entrant into a territory that may not intuitively appear to be its natural hunting ground.
At a recent media briefing Mr Williams said: ‘life goals are at the centre of the client’s wealth management strategy, ’ adding that UBS ‘recommends a suitable investment strategy based on a client’s individual financial situation relative to their attitude to risk and an understanding of their life stage, assets and goals’.
Goal Based Investing
When engaging with SmartWealth, customers can set a goal or series of goals, e.g. property purchase, tuition fees or retirement and the platform calculates the feasibility of achieving them based on proposed contribution levels, target dates and risk levels.
These parameters can then be adjusted to ‘dial risk up or down’ to create different outcomes; SmartWealth allows its clients to select either active or passive investments, or blend them as required.
The platform allows the client to ‘import’ a view of assets that are not held with UBS to create a holistic picture of their total wealth and enable more accurate goal planning.
it is designed to appeal to a ‘mass affluent’ audience, with investable assets of between £100,000 and £2m
Few banks have the experience or wealth management heritage that UBS can call upon in support of its new platform; in addition to ETFs and passive tracking funds, it also gives those opting for passive investment management access to UBS’s first SmartBeta fund, created specifically for SmartWealth. (What is a smart beta ETF?)
Client portfolios are adjusted on an ongoing basis relative to the views of UBS’s investment experts based upon their assessment of global economic, financial and political events.
Whilst sharing the ambition to democratise investment with a number of the other digital wealth managers, with a minimum investment of £15,000 SmartWealth does not have millennials in its cross-hairs; rather it is designed to appeal to a ‘mass affluent’ audience, with investable assets of between £100,000 and £2m.
SmartWealth has fees that are adjusted according to the amount invested and the chosen investment strategy.
The annual ‘advisory fee’ is charged on the following basis:
- Below £100,000: 0.25% (annual basis)
- Between £100,000 and £250,000: 0.15% (annual basis)
- Above £250,000: 0.1% (annual basis)
This fee covers all account management, custody and trading commissions.
The client also pays On-going Charges Figures (OCF) which includes the costs of the fund itself (paid to UBS) varying depending on the underlying investments:
- for passively implemented funds the OCFs are generally between 0.80% – 0.90% (annual basis)
- for actively implemented funds the OCFs are generally between 1.15% and 1.75% (annual basis)
A client investing £15,000 and adopting a passive investment strategy would attract total costs of 1.12% p.a.; one with £100,000 and an active strategy would pay 1.79% p.a.
SmartWealth allows client assets to be sheltered within an ISA wrapper, and should an individual’s circumstances or objectives change, human assistance is available from its Client Management Team.
At Robo-investing Europe Mr Williams explained that the solution was built from the ground up, with the client’s needs as its focus at all times – ‘client first, beginning with the simple question ‘why?’; despite the oversight of an external agency to crystalise the proposition, development was kept in house to ensure that its core tenets remained true to the original concept.
using new technology to provide regulated advice, education and investment information
He said that the team of 70-80 full-time staff working on SmartWealth came together to work collaboratively ‘to create a fintech start-up culture for SmartWealth.’
The adoption of an innovative team culture within such a large organisation resulted in SmartWealth being brought to market within just a year, which is extremely agile in the scheme of such things; being the first of its kind the bank fully expects to be ‘closely monitored’ by UK regulators.
Mr Williams says that SmartWealth differs from other platforms because: ‘up until now, technology hasn’t been used to help people make better investment decisions. For the most part, so-called ‘robo-advisers’ have merely used technology to cut their own costs, in the meantime offering no actual advice at all.
‘UBS SmartWealth uses technology to add value to our clients, not to cut our costs. Hundreds of investment, markets and economics experts all over the world will be working around the clock to make sure our clients’ money is invested appropriately. We are using new technology to provide regulated advice, education and investment information to our clients, all in one place’
The solution was built to take advantage of UBS’ international presence and will be rolled-out to other countries subject to its success in the UK.