UBS is to launch a “robo-advice” service in the UK next month as part of a $1bn investment drive to attract younger clients to its flagging wealth management business.
The world’s largest wealth manager will launch the service, which recommends a portfolio of investments based on some simple questions, on November 21. It will be followed by an advertising campaign in 2017.
UBS believes the launch will up-end the investment advice market by offering services previously restricted to society’s richest members. It also heaps further pain on financial advisers, who risk losing out on business to robots.
The minimum investment for the new service has been set at just £15,000, a fraction of the £2m usually required to open a UBS private bank account, and pitches UBS against fund supermarkets such as Hargreaves Lansdown and Fidelity.
Dirk Klee, chief operating officer at UBS Wealth Management, said: “Robo-advice represents the democratisation of wealth management.”
BlackRock, Vanguard and Goldman Sachs have also recently developed new online investment services, which pose profound questions about the role of human advisers and which threaten to disrupt traditional sales channels for mutual funds.
An “all in” fee of 1 per cent will apply if investors buy a portfolio of passive index tracking funds. These fees include charges for investment advice and platform administration as well as the cost of the underlying funds.
Mr Klee said UBS was not planning to compete purely on price with other robo-advisers but to offer a more sophisticated interactive service to help clients invest for the future.
Jamie Broderick, head of the UBS wealth management business in the UK, said the new service would “help to close the advice gap” that has opened as a result of the substantial decline in the number of human advisers working in the market.
UBS said it plans to extend its new robo-advice service globally, moving into Europe and Asia next year, as part of a broader strategic push by the bank to save costs and improve its services to clients.
It has invested about $1bn to redesign all of the processes across its wealth management operations.
Pre-tax profits for UBS’s wealth management division fell 23 per cent in the first half of 2016 compared with the same period last year while its cost/income ratio rose from 60 per cent to 66 per cent, underlining a need for change.
Earlier this year, UBS announced plans to merge large parts of the back and middle-office functions within its wealth management business, saving several hundred million francs a year and resulting in hundreds of job losses.
Jürg Zeltner, president of wealth management, said UBS needed to “do things faster and better” when the restructuring was announced.
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