The report’s main finding - wealth volume decreasing over the past year while the actual number of billionaires rose in 2015 – is closely linked to the low-yield environment and the fact that the ultra-wealthy are slowly moving to other sources of revenue and growth opportunities.

Investment opportunities are less clear in a more opaque financial environment, Zuercher told this publication, and this causes capital to stagnate and wealth to be diluted.

However, UBS and PwC forecast that the 2015 observations do not set “trends” and that “financial asset performance and economic growth will create a favourable environment for billionaire wealth creation in 2016 and 2017”.

“There is a growing affection for hedge fund products, which can work to the benefit of our clients in times of anticipated high volatility,” said Zuercher. The risks associated with investing through hedge funds can often be less than is supposed, he continued. “Hedge funds are not traditionally sought-after in Asia, however,” he added.  

There is considerable upside potential and this should bode well for UBS, which boasts the world’s biggest hedge fund division.

Secondly, he said, there is growing interest in private debt. Preqin's 2015 mid-year Spotlight report noted that 17 private debt funds with a primary focus on Asia closed in 2015, securing $6.1 billion in aggregate capital, marking a peak both in the number of funds closed and aggregate capital raised in Asia since 2012.

Changed banking landscape
As for industry trends, when asked whether or not the financial crisis had drastically changed the nature or conditions in which private bankers operate, Zuercher did not seem convinced by the assumption. This seems to chime with recent analysis. This publication, in conjunction with UBS, recently wrote about how the financial crisis, and changing investment patterns, have encouraged family offices and other investors to switch to smaller boutiques and independent wealth players (see report here). Last week, WealthBriefingAsia interviewed one such independent wealth firm, Golden Equator Capital. GEC’s director said the financial crisis ended clients’ practice of holding large numbers of bank accounts. (See here.)

UBS says that, on average, it is one of two consultants/custodians working to service the needs of each billionaire. The trend reflects the high complexity of the needs of these accounts, said Zuercher.

Finally, while there is scepticism about the benefits of “robo-advisors”, UBS cannot afford to doubt the trend of automated investment and advisory platforms and has developed its own technology solutions in this space.

“Whereas there is no proof yet that robo-advisors reap better results than traditional services, we do see the benefit of integrated technology to engage more efficiently with our clients,” said Zuercher. “We are currently using it to better inform our clients of any of our moves, and reciprocally, act faster on their decisions and their moves,” he said.

(The author is a journalist based in Hong Kong.)