Scott Webster of UBS: ‘fund engagement with their members is the holy grail’
The introduction of sophisticated member-directed investment options (MDIOs) may have been prompted by a defensive frame of mind among trustees of big super funds, which have been losing higher-balance members to the SMSF market. But, in the rapid evolution of these options over the past couple of years, it seems that the enhanced member engagement that MDIO brings has also become a key driver. Scott Webster, managing director and head of the UBS Platforms Solutions Group, one of the main players in this new market, spoke with Greg Bright about MDIOs, the ASX’s mFund initiative and other trends impacting investors and the big full-service broking and advisory firms such as UBS.
While the traditional equities execution business of big stock broking firms has changed over the years due to technology and market pressures from discount firms, the one constant has been the demand for quality and comprehensive research and advice. More recent trends, too, have widened the brief of brokers and investment banks. These trends – such as MDIOs and the ASX’s mFund – are being driven by investor demand and enabled by technology.
Scott Webster, who has been with UBS for 18 years, has headed up the two-pronged ‘Platform Solutions Group’ for the past four years. PSG consists of an execution and clearing services division headed up by Michael Hawke and the investment platform business, headed up by Ian Dunbar.
“We are fundamentally in the infrastructure business,” he says. “Our core goal is to provide our clients with the best possible capability and assist them run their operations in the most effective way” On the equities execution side, which can include access to UBS research, his clients include MDA (managed discretionary account) providers, wealth advisers, other brokerages and large platforms. Both domestic and international markets are covered. Within investment platforms, the focus has been on the big super fund market in Australia.
In this, UBS has been particularly successful. UBS has won the biggest share of the nascent MDIOs market (which UBS calls DTMs – direct to member) in terms of assets and members. To date its competitors for the new-style MDIOs introduced by big super funds are Macquarie – which has so far provided its service through Australian Administration Services and Mercer – and Lonsec.
Webster says that the funds themselves set the rules around the MDIO offering to members, such as minimum account balance and what asset classes are included. Typically, this will include direct equities, ETFs, term deposits and cash. But UBS have the ability to include other asset classes in the mix. The PSG platform provides access to daily valuations, market data, stock research and an advisor portal to facilitate the provision of individual advice to members.
Webster advises that his groups MDIO will also make available other capabilities such as in specie transfers, post retirement income products, model portfolios and international equities providing similar opportunities as that available to any SMSF trustee, but at a much reduced cost (typically 10% of an SMSF). The system also has alerts and protections that enable the funds to prevent their members from overly risky investment strategies, such as a too-high concentration in any one stock. It also provides separate corporate actions alerts.
“The expansion of direct to member offerings by super funds is inevitable,” Webster says. “They are rolling out additional capability in a controlled fashion. I think the trend will be for this to happen in concert with the broader advice capability being developed by the funds. Additionally having dealt with a lot of the regulatory changes, such as MySuper and SuperStream, they are becoming more focused on their DTMs as bandwidth increases.”
Prior to his current role, Webster was the chief operating officer of UBS’s equities business in Australia and New Zealand, for a decade and before that he was in product control. He started his career as a “paid-up” chartered accountant at Deloitte, where his clients included some big investment banks. He was attracted by the broad range of roles across the spectrum of investments which UBS offered from an interesting career perspective.
“We [UBS] effectively support the whole market,” he says. “As the COO of the Equities business I had exposure to the full range of investments and client segments in the market .”
Webster has been on the board of the Stock Brokers’ Association for several years and currently chairs the institutional broking committee. He has also been on the equities steering committee of AFMA, including as chair, and an industry representative on the Markets Supervisory Panel for ASIC. The ASIC role has kept him particularly busy in the last few years due to the organisation’s heavy policy and regulatory agenda. He says ASIC has been active in seeking to consult with the industry for which they should be commended.
Much of Webster’s job is about looking for and providing greater efficiencies, and therefore reduced costs, for investors. He says that one of his main concerns is whether new regulations are balanced.
“It’s understandable that there has been more regulation as a reaction to the GFC,” he says. “But it’s important that we don’t over regulate services out of their cost-effectiveness. For example, getting quality advice is a great thing. We don’t want to make advisory services so expensive to provide that we end up excluding access to the people who need it the most.”
The ASX’s mFund initiative, which is still in its early stages, is another example of providing a more efficient way of doing something which has already been done for years, Webster says. It is simply a more efficient way of being able to apply for and be allocated an investment in a managed fund, taking out some of the costs associated with the process.
“If it works, everyone will be there eventually,” he says. “It’s a settlement service but some firms will see it as presenting a business opportunity to provide new research [on managed funds] in the future.. .”
Webster believes that engagement with members is the “holy grail” for super funds and they really are driven to do the best for their members. They place a very high value on being able to better communicate with members, he says. Funds also want to be able to make advice and product services available at a palatable cost. “The UBS MDIO platform gives them a portal to achieve all of these things “.
