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UBS mass market push ends with robo-advisor sale

The Swiss bank was ‘out of its comfort zone’ with the Smartwealth launch.

UBS’s foray into smaller portfolio offerings for the mass market has come to an end with the closure of its robo-advisor less than 18 months after launch, according to a report from FSA sister publication Portfolio Adviser.

A spokesperson confirmed on Wednesday that it would shutter its digital-only offering in the UK due to limited near-term potential. It has sold the intellectual property relating to UBS Smartwealth, which launched in February 2017, to Sigfig, a US financial technology firm founded in 2011.

At launch last year, UBS had touted its entry into robo-advice as evidence that digital wealth management was not limited to start-ups.

UBS was ‘out of its comfort zone’

Robo advice is a difficult sell for UBS’s traditionally high net worth clientele, said Heather Hopkins, founding and managing director of Nextwealth. “Digital only will meet the needs of a certain subset of the population but face-to-face advice through personal referrals still dominates the retail investing world.”

The minimum investment required for Smartwealth was £15,000 ($19,512.82), compared with the £2m threshold usually required to engage UBS private banking services.

Hopkins contrasted UBS with Aviva.

Hopkins said: “Aviva has a large book of customers with sampler portfolio sizes bar may need financial advice through their workplace savings proposition. Their tie-up with Wealthify makes sense as it can help fill a gap that exists.”

Bella Caridade-Ferreira, chief executive officer at Fundscape, said UBS was “outside its comfort zone”. “Robo advisors fish in a different pool of investors, which may be why it was disappointed at the slow progress the robo made.”

Nutmeg has struggled to break even and Moneyfarm, which has £400m ($520.3m) in assets under management, had to go raise more funds in May, Caridade-Ferreira said. But she added: “I don’t think others will give up easily as they’re aware that it’s going to be a long, slow burn.”

Robo advisor limits

A UBS spokesperson said the bank had been satisfied with the initial commercial progress of Smartwealth.

She said: “Having conducted a thorough assessment, however, at this time we believe the near-term potential is limited and have therefore decided to close our digital-only offering in the UK.

The spokesperson said the decision allows it to invest in other client-facing improvements.

At launch, UBS had said the purpose of Smartwealth was to attract younger clients, first in the UK and then other geographies.

Dirk Klee, chief operating officer of UBS Wealth Management, had described it as a strategically important move, stating technology was changing the way financial services were being delivered. “The launch of UBS Smartwealth shows that digital innovation is not the sole reserve of start-ups,” Klee had said at the time.

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