UBS Shake-Up Aims to Court the Richest of the Rich

Going after the richest of the rich — so crazy, it just might work.

UBS is the latest megabank to revamp its business with an eye toward courting the world’s most well-heeled investors as it looks to boost its underperforming US business. The strategy involves forming a new unit, called GWM Solutions, that will act as a one-stop shop for super-wealthy investors, packaging investments, lending, family and institutional wealth, and alternatives. 

The leaders of the bank’s global wealth management business, Iqbal Khan and Rob Karofsky, informed employees of the news in an internal memo last week that was reviewed by The Daily Upside. The Zurich-based bank joins a growing list of wealth management’s elite firms, including JPMorgan and Goldman Sachs, to focus on the upper echelon of investors.

A New Regime

It’s not rocket science — wealthy investors provide managers with the best bang for their buck. In recent years, JPMorgan has attracted more than $15 billion from wealthy investors via separately managed accounts that benefit ultra-high-net-worth individuals. Clients get the benefits of tax-loss harvesting, and the bank gets to charge handsome fees on accounts with sky-high minimum requirements.

Still fresh from its takeover of Credit Suisse, UBS’ wealth management unit now oversees more than $4 trillion:

• Former Credit Suisse wealth banker Yves-Alain Sommerhalder will lead the new GMW Solutions unit, according to the company memo.
• UBS has also poached longtime JPMorgan exec Mike Camacho to reinvigorate its US wealth management business. 
• UBS is finding its footing in the US, which is home to the most centi-millionaires and billionaires of any nation, with 9,850 and 788, respectively, according to the latest USA Wealth Report. 

Succession Progression: Khan previously ran the bank’s wealth business by himself, but he’s now joined by Karofsky, who was the bank’s investment head. Khan is also relocating to Asia and will become the bank’s Asia-Pacific region president, too. Both are being touted as prime candidates for the company’s CEO position once Sergio Ermotti retires, according to reports.