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UBS Adds to Zero-Fee SMA Offering so FAs Can Make Better Use of Their Time

By Peter Rawlings May 5, 2021

UBS Financial Services is adding several model portfolios to its zero-fee separately managed account offering. The move is aimed at freeing its advisors to spend more time interacting with clients rather than on the day-to-day management of their portfolios.

UBS is today adding portfolios from BlackRock, Capital Group, Dimensional Fund Advisors, JPMorgan, Natixis Investment Managers and Nuveen with no additional investment manager fee to be paid by clients.

The firm started its zero-fee SMA program in January 2020 with strategies from UBS Asset Management and subsequently added a handful of strategies run by third parties in June 2020.

“We felt that clients are willing to pay for advice, [but] less willing to pay for pure portfolio management,” says Steve Mattus, head of advisory and planning products for the Americas at UBS Financial Services.

“What this allows our FAs to do is really get out of the business of picking individual funds, entering trades and rebalancing portfolios, and to focus on discovery [and] what do clients need,” Mattus says.

Having model portfolios allows FAs to “look for new ways to differentiate their value-add to clients, improve investment outcomes and efficiently scale their businesses,” says Ted Dimig, asset management head of advisory and core beta solutions at JPMorgan, one of the firms added to the zero-fee SMA roster.

The zero-fee SMA model portfolios already introduced by UBS have seen significant uptake by FAs’ clients so far, with a “hockey-stick-like growth in assets,” says David Blank, head of managed accounts for UBS.

In the first quarter of 2021, the bank’s asset management division brought in $26 billion in net new money, of which roughly one-third went to zero-fee SMAs, CEO Ralph Hamers said last week during a call with analysts to discuss earnings.

“A large majority of what we’re trying to do here … is to help advisors find ways to earn back time,” enabling FAs to devote more of their time talking with clients rather than managing specific investments, Blank says.

UBS is also hoping to use the assets the zero-fee SMAs attract to in turn lure more advisor recruits, a person familiar with the firm said last week when discussing first-quarter earnings with media.

The wirehouse plans to continue introducing more model portfolios to the zero-fee SMA offering in the months ahead and is considering adding other investment solutions to help meet client needs, Mattus says.

For instance, UBS is studying option overlays delivered by third-party asset managers, which it hasn’t done much in the past, he says. Those overlays could help clients generate income on their portfolios or to exit concentrated strategies, he adds.

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Tags:  Finding and winning new clients , Client retention , Fees and compensation , Portfolio management , BlackRock , Dimensional Fund Advisors , JPMorgan , Natixis , Nuveen , UBS Asset Management , UBS Financial Services , UBS

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