Ubs bank (canada), the Toronto-based subsidiary of Switzerland-based banking giant UBS AG, has ambitious plans to expand its wealth-management business in Canada, including hiring more advisors and seeking suitable acquisition targets.

“We’ve made no bones about it: we want to grow and we want to grow aggressively,” says Grant Rasmussen, head of UBS Bank’s wealth-management arm.

UBS Bank has been in Canada since 1951 and has offices in Toronto, Montreal, Vancouver and Calgary. It also has an investment banking division and a global asset-management division (which manages portfolios on behalf of institutional clients); the wealth-management division, which consists of 23 advisors, has been managing the assets of high net-worth clients, whom the company identifies as those with between $1 million and $50 million of investible assets, and ultra-high net-worth clients since the early 1990s.

As a central part of the expansion strategy, UBS Bank announced in October that it had formed a specialized in-house team of advisors, the KeyClient Group, to serve families with more than $50 million in investible assets.

“In the past, there was a lot more comfort with normal solutions that would have been available to the $3-million to $5-million client. Key clients were fine with that,” Rasmussen says. “Not so much anymore. Now, they’re looking for services such as strong links to the investment bank and more specific things that are almost institutional-like services.”

UBS Bank’s Zurich-based parent, which operates in more than 50 countries, introduced the Key-Client Group concept in some of its markets three years ago. But it has taken the Canadian arm until now to prepare its team and to build the critical mass, in terms of the number of clients, to launch the initiative. “The inflow of business to us has been significant in 2005 and 2006, so that’s really pushed us,” Rasmussen says. “And we’ve had the benefit of seeing this rolled out in Switzerland and some of the largest markets and learning from that.”

UBS Bank won’t divulge how many ultra-high net-worth clients it already serves. But, Rasmussen says, the goal is eventually to capture 10%-15% of the market, which he says consists of about 3,000 Canadian families.

Sam Sivarajan, who was hired last year specifically to build and develop the Canadian KeyClient Group, will head the new team, which also includes veteran UBS advisors Erika Hofer and O.J. Tuters in Toronto and Wolfgang Harder in Vancouver. Sivarajan previously worked as a mergers-and-acquisitions banker in Britain, and has law and business degrees from the University of Toronto.

“Key clients have specific needs. By institutionalizing the group globally, UBS makes sure there is a consistent and proactive approach,” Sivarajan says. “My team focuses exclusively on the $50-million-plus clients — not the $5-million, not the $10-million, not the $25-million clients. We don’t think we would be serving them appropriately, based on the focus that our group has.”

Right now, UBS Bank’s ultra-high net-worth clients are spread among the firm’s advisors. Those clients will be slowly moved over to the KeyClient Group, as well as new clients who are at the $50-million-plus plateau. UBS Bank says its advisors are on board with that plan.

“We can transition them on a hand-holding basis — over three months, six months, a year, two, three or five years. Whatever is the right fit for the client,” Rasmussen says. “If the client insists, ‘I like my advisor; I want to stay put,’ then he or she will stay put.”

Says Graeme Harris, UBS Bank’s head of corporate communications: “Our advisors understand that key clients need the services of the KeyClient Group, and understand what we’re trying to accomplish, which is a client experience for the ultra-high net-worth client. With 23 client advisors, we were able to discuss this issue with them.”

Key clients tend to have highly complex wealth-management needs that require sophisticated services and solutions, says Sivarajan. The KeyClient Group, he says, will tap into UBS’s global network of experts to customize solutions for these ultra-wealthy client families.

“Key clients are more focused on wealth preservation than wealth accumulation,” Harris says. “We had a client who had a $200-million liquidity event, and what he wanted to do was make sure those monies were invested, not just for the current generation, not the next, but for the next five generations. The demands were different from what the $5-million client would have.”

@page_break@Sivarajan explains that UBS has offered the client a customized solution called “active capital preservation,” which involves a dedicated portfolio manager managing the client’s portfolio, testing it on a daily basis and tweaking it if necessary.

That service may also include tax expertise. If a client needs multi-jurisdictional tax advice, for example, UBS Bank can tap into tax experts in each country in which it operates, Sivarajan says.

UBS can also provide relocation services. The firm offers clients access to more esoteric services as well, such as aircraft financing and art or wine banking, in which UBS will help a client invest in or purchase works of art or vineyards.

“Only one to three clients out of 100 might need these services. But the expertise is there,” Sivarajan says. “In the world of the key client, it becomes more and more relevant. They tend to have non-traditional asset needs.”

Says Basil Kalymon, a professor of finance at the Ivey School of Business at the University of Western Ontario in London, Ont.: “There are pockets of concentrated wealth, if you look at what’s happening not only in Canada and the U.S., but in Russia and other places. It’s not surprising that this segment would attract attention from firms such as UBS.”

As well as growing its ultra-high net-worth client base, UBS Bank hopes to attract more ordinary millionaires by hiring new advisors to attract and serve them. But the firm admits it is hard to find suitable advisor candidates. It hired just six last year, despite interviewing up to 200 applicants. Rasmussen would love to hire eight to 15 new advisors next year, but expects he’ll end up hiring between six and eight.

UBS Bank requires prospective advisors to hold a portfolio manager certification and a Level 1 chartered financial analyst designation. Perhaps more important, Rasmussen says, the prospective advisor must have a “client-centric, team first” focus.

“It starts with a true passion for clients, a true passion for a global approach,” he says. “Prospective advisors are pounding on our door, saying, ‘I buy into your values; I buy into providing the world’s best solutions to individuals’.”

Advisor compensation at UBS Bank comes in the form of an “above average” salary and a bonus based on the amount of new money the advisor brings into the firm, whether that’s an existing client placing more money with UBS Bank or by a new client. Clients have a choice of payment options: per transaction or on a fee basis, with the percentage ranging from 50 to 150 basis points, depending on the amount of assets and the asset mix.

UBS Bank advisors don’t get paid commissions, which Rasmussen contends would open advisors up to conflicts of interest. Rasmussen isn’t shy about expressing his disenchantment with certain aspects of the brokerage model of business: “In terms of advisors moving from place to place, saying, ‘I’ll move $100 million or more in assets over to your firm if you pay me a large cheque to move it, and I’m willing to be locked up for four years before I get ready to move again for another cheque’ — that mercenary mindset is not in the best interests of clients, nor do we believe it’s in the best interests of our industry. It’s a poison that’s in our industry.”

Dan Richards, an industry consultant and president of Toronto-based Strategic Imperatives Ltd., says the investment-counselling business, such as the one UBS operates, tends to attract a certain type of advisor: “It takes a different mindset, a different psyche. There’s a longer sell cycle. It often takes longer to develop, cultivate and bring new clients aboard.”

UBS has had great success acquiring and integrating other firms and, Rasmussen says, there is a need for consolidation among investment-counselling firms in this country: “Canada is an attractive wealth-management market, one of the largest in the world. UBS has big interest in growing here. But the issue is similar to the one in recruiting: quality will trump everything. Our dominant growth will end up being more organic than by acquisition.” IE