Switzerland-based UBS Group is planning to target those who fall in the lowest bracket among the rich to help boost the bank’s profitability.
Starting next year, UBS Group’s clients in Switzerland who fall in the bracket between $500,000 and $5 million in assets will fall under a new coverage model that uses more technology and fewer human interactions. Previously, clients with assets worth between $500,000 and $2 million used to fall under a different category.
The shift comes after UBS carried out two internal studies over the last few months. The studies revealed that clients with assets between $2 million and $5 million behave more like clients in the lower segment than high net worth clients. They use more online services rather than client advisers and don’t make use of sophisticated products and service offerings, according to media reports.
Reportedly, Christine Novakovic, the head of wealth management in Europe, the Middle East and Africa, informed UBS employees about the same in a memo.
UBS Group’s competitor in Switzerland, Credit Suisse is also mulling over adopting a similar strategy. The Switzerland-based banks’ decisions highlight that wealth managers are shifting focus on the less affluent customers.
In a report published earlier this week, UBS predicted a decade of low returns and higher volatility for most financial assets, when compared to the previous decade.
Mark Haefele, CIO of UBS Global Wealth Management, told the media, “The anticipated ‘decade of transformation’ will mean lower returns and high volatility for most assets compared to the past decade, meaning investors targeting a given level of return may, therefore, need to increase their allocation to riskier assets such as equities.”