The Swiss bank will stop reporting net new money from its mainstay private bank as regularly as it currently does, and replace it with a new measure.
Zurich-based UBS said in financial results on Tuesday it will no longer report net new money in its global wealth unit every quarter – although it will continue to disclose the indicator annually. In its place, it is introducing «net new fee-generating assets» as a performance measure.
This moves away from a standard gauge used to project growth in the wealth management industry to one that may show a more nuanced view in future.
Recurring Picture
On Tuesday, the wealth manager said the new measure should help to better capture flows driving a substantial proportion of recurring fees when digested with two other new measures: fee-generating assets, and the fee-generating asset margin.
UBS will provide these metrics quarterly by region from now on. It remains to be seen if other institutions follow suit in the future or continue to disclose net new money – or their own variants of it.
Inflows In All Regions
The bank said the objective of the new measure will be to show growth in clients' invested assets from net flows related to mandates. The bank defines these as comprising investment funds with recurring fees, hedge funds, and private market investments, including dividend and interest, minus the fees it charges clients.
It said the underlying assets and products from the mandates generate most of wealth unit's recurring fees as well as contributing to some transaction income. In the first-time disclosure of the new measures, the fee-generating asset base rose 4 percent to $1.33 trillion.
Net new fee-generating assets, the figure most closely corresponding to net new money, was $36.2 billion, with inflows seen from all regions.
Stripping Out Assets
When comparing the old measure with the new, UBS said net new fee-generating assets would not include flows from assets recording commission or transaction spread revenues – or those that are borrowed against by clients and recorded as net interest income. They will also not include flows from deposits that would appear in UBS accounts as net interest income or custody fees.
Fee-generating asset margins fell four basis points to 86 basis points from the same period a year earlier, as inflows were mostly into mandates and funds levying lower fees. Compared to end-2020, however, they were up four percent.
Invested assets stood at $3.11 trillion at the end of the first quarter, and client assets $3.53 trillion.
