UBS is determined to make its business with wealthy Americans more profitable and successful. Instead of worrying about new regulatory requirements, the bank’s CEO, Sergio Ermotti, is focusing on growth. He plans to integrate CS and save costs while expanding UBS into a globally dominant asset manager. In just a few years, the bank is expected to manage $5,000 billion in invested assets.
However, the journey there is still long. Today, UBS manages around 3,900 billion in assets with CS’s funds. The bank’s president, Colm Kelleher, believes that the new assets should come from the United States and Asia. However, UBS has had a problem for years with profitability in asset management significantly worse than in other regions of the world. Wall Street competitors Morgan Stanley, JP Morgan, and Bank of America are clearly ahead.
In the final quarter of 2023, UBS’s pre-tax profit in US asset management fell significantly. The bank reported “shockingly low profitability,” with the lowest quarterly profit in 12 years. Wealth Management USA, with its more than 6,000 customer advisors, struggles with high operating costs due to financial advisors being crucial to relationships with customers.
UBS has Marcel Ospel to thank for its strong presence in the USA. The legacy of the former UBS boss lives on in the big bank after he was architected by forming it from a merger and acquired American brokerage house Paine Webber for over 20 billion francs. However, this model brought challenges as financial advisors were crucial to maintaining relationships with customers in America.
UBS has tried to change this brokerage model before but had little success due to Iqbal Khan’s global wealth management responsibility and Jason Chandler’s head of US wealth management working together solely on getting business up to speed while improving operations in America by adjusting incentives for financial advisors and investing heavily while expanding their product portfolio. Despite these challenges facing UBS in America where $1.8 trillion under management is modest compared to competitors compared to others globally; they remain focused on long-term investment and operational improvement hoping that this will attract new customers and increase profitability in US asset management.
In conclusion, UBS has been struggling with profitability issues in asset management for several years now but is determined to turn things around by focusing on growth rather than regulatory compliance concerns during Ermotti’s first term as CEO
