UBS Wealth Management - cebccebc.hu/ppt/xxiii_ceo/giuseppe-de-filippo.pdf · Investment Banking and...

FOR MARKETING PURPOSES BY UBS

April 2012

UBS Wealth Management

BOOKING CENTER SWITZERLAND

From Entrepreneur to Wealth Manager: Professional, Personal and Financial Challenges of Business Sales


1

One who cares is one who listens.

1. Introduce UBS Group and our capabilities in Central and Eastern Europe

2. Understanding the entrepreneur, his company and his family

3. Overcoming the professional, personal and financial challenges of business sales

4. Your point of view – Conclusions

Today's Objectives


2

Table of Content

• UBS Group and our capabilities in Central and Eastern Europe

• Holistic understanding of the Entrepreneur, his business, his family

• Professional, personal and financial challenges of business sales

• Conclusions


3

UBS – one of the leading financial firms

• UBS draws on its 150-year heritage to serve private, institutional and corporate clients worldwide, as well as retail clients in Switzerland. UBS employs about 65,000 people around the world

• We combine our Wealth Management, Investment Banking and Asset Management businesses with our Swiss operations to deliver superior financial solutions and manage CHF 2.2 trillion in invested assets

• UBS is present in all major financial centers worldwide. It has offices in over 50 countries, with about 37% of its employees working in the Americas, 37% in Switzerland, 16% in the rest of Europe and 10% in Asia Pacific

Please refer to the disclaimer at the end of this presentation


4

About UBS – Wealth Management at the core

Wealth Management & Swiss Bank

Focuses on delivering comprehensive financial services to high net worth and ultra high net worth individuals around the world as well as private and corporate clients in Switzerland. Our Wealth Management business unit provides clients in over 40 countries with financial advice, products and tools to fit their individual needs.

Wealth Management Americas

Provides advice-based relationships through financial advisors who deliver a fully integrated set of products and services specifically designed to address the needs of ultra high net worth, high net worth and core affluent individuals and families in the US as well as in Canada.

Global Asset Management

A large-scale asset manager with businesses diversified across regions, capabilities and distribution channels. It offers investment capabilities and investment styles across all major traditional and alternative asset classes. These include equities, fixed income, currency, hedge fund, real estate, infrastructure and private equity investment capabilities.

Our business is built on strong relationships

InvestmentBank

Provides securities and other financial products and research in equities, fixed income, rates, foreign exchange and precious metals. It also provides advisory services and access to the world's capital markets for corporate and institutional clients, governments, financial intermediaries, alternative asset managers and private investors.



5

UBS Capabilites in Central & Eastern Europe

Advisors ♦ Switzerland: A strong workforce of dedicated client advisors

with language capabilities ♦ Russia Advisory Office: Launched

HUNGARY MOLDOVA

SERBIA

CROATIA

MACEDONIA

ROMANIA

BULGARIA

POLAND BELARUS

UKRAINECZECH

SLOVAKIA

ALBANIA

LITHUANIALATVIA

ESTONIA

RUSSIA

MONTENEGRO

BOSNIA

SLOVENIASWITZ.

ICELAND

Representative Offices ♦ Prague♦ Moscow♦ Budapest♦ Kiev♦ Warsaw

Dedicated Research♦ Over 120 analysts cover the region

Product offering

♦ Booking centers in Zurich, Geneva, London and Singapore

♦ Market related products, tailor-made for Eastern European clients by our numerous market and product specialists


Being one of the leading wealth managers for Eastern Europe provides access and opportunities for our clients


6

Table of Content




• Conclusions


Wealth Planning - you and your wealth


Wealth accumulation Wealth preservation

RetirementEarly retirement

Advancement of inheritance

Well established company

Setting up a company/Career

Wealth transfer

Heirs/succession

MarriageFamily

Age9080706050403020

Assets

Cost of living

IncomeEUR

No matter what phase of life you are in, we are here to help you meet your financial goals

• In emerging markets there is a general shortage of qualified professional managers

• Thus, business owners often face difficulties finding a potential CEO who could take over day-to-day management

• The Inheritors' dilemma is how to create an effective individual identity strong enough to separate from, yet integrate with, the massive power of wealth

• Wealth brings freedom in choices of lifestyle but also a sense of obligation to society

• For a family business it is to be understood

– Owner and ownership structure

– Management, by owner or outsiders

– personal and financial needs of the owner

– Needs/ goals of the family members


8

The Role of a Private Banker

Maximize the value of your

business

Manage your financial assets

Create lasting family wealth

Understanding begins with listening to you, focusing on your personal situation

When we talk about your financial future, we consider all the relevant information about your situation

Three interconnected worlds


♦ Your assets and liabilities

♦ Your stage of life

♦ Your attitude to risk

♦ Your investment horizon

♦ Your cash flow requirements

♦ Your ongoing personal needs


9

Table of Content




• Conclusions


10

Aspects of a Liquidity Event

• Sale of a business or liquidation of a position in a business or partnership

• Sale or disposition of a concentrated or illiquid asset. The sale of concentrated stock positions, real estate or other holdings may also amount to a liquidity event, usually when it represents a primary or majority share of net worth

• Financial windfall. A less frequent form of liquidity event occurs when an individual receives a large financial position that significantly alters his or her financial state

A liquidity event refers to the conversion of an illiquid asset, a business, a building, into a liquid form such as cash. We need to consider several aspects

Liquidity event

• Economic outlook

• Industry outlook

• Tax outlook

• IPO and M&A cycle

• Personal goals

• Life stage/Age

• Family goals

• Wealth/Financial goals

External aspects

Internal aspects

To be considered


11

Roadmap for a Successful Company Sale

Business

As private bankers we support the entrepreneur in the 3 worlds but…

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2Y

bef

ore

Up

to

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bef

ore

Up

to

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afte

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• Focus all your energy on getting the best deal

• Monitor business cycle to identify good timing for sale

• Build team of trusted advisors• Fine-tune business model

• Prepare employees and managers for transition phase

• Bring M&A advisory team on board and start looking for potential buyers

• Prioritize needs and goals• Understand roles and goals of

family members

• Do not interfere with new management if you still occupy a position in the firm

• Reassess work aspirations

• Use personal activities to remove stress and relax as much as possible

• Prepare family members for transition phase, consider more formal family governance

• Think about your role after the sale

• Settle into your new role and pursue lifetime goals

• Go on a long vacation or take lots of time off with family and friends

• Develop strategic asset allocation to fit financial goals

• Invest your money along your personal financial plan

• Structure wealth, possibly transfer ownership to heirs

• Invest assets to protect them against losses before sale

• Delegate management and oversight responsibilities for financial assets

• Do not be distracted by your investments. If need be, park them in safe assets

• Separate accounts for taxes, consumption and investments

• Educate yourself about wealth management

Family Investments


12

Behavioral Biases of Entrepreneurs

… the strengths as an entrepreneur lead to weaknesses as investors

Typical entrepreneur' behavior...

...translates in behavioral bias...

... leading to typical mistakes as investor!

Belief in one's ability helps overcome difficulties

Overconfidence Increased stock picking activity and excessive trading costs

Keep faith in business during difficult times

Optimism Overly concentrated portfolios with excessive risk

Owners have power to control business operations

Illusion of control Portfolio trades at the worst moments in time

Spot new opportunities from few recent observations

Representativeness Trend following

1

2

3

4


13

The importance of Strategic Asset Allocation

Strategic Asset Allocation: The appropriate mix of asset classes based on long-term market assumptions (10+ years) given an investor's objectives and risk tolerance. The optimal portfolio depends on the preferences and the risk profile of the investor. Sub-optimal

portfolio

Optimal portfolio

Efficient frontier line

Risk

Retu

rn

Strategic Asset Allocation of an initial and optimized portfolio.

The efficient frontier line represents the portfolios with the lowest risk for each given return level. These portfolios are called "efficient" portfolios.

Equity

Bonds

Real Estate

Cash

Sub-optimal portfolio

Optimal portfolio

Equity

Bonds

Commodities

Real Estate

Cash

Hedge Funds

Private Equity


For illustrative purposes only

1

The most important decision, in the long term, is the Strategic Asset Allocation, as it accounts for up to 90% of asset returns


1414

The best-performing asset classes change over time

For illustrative purposes only. Markets are subject to change and returns may vary. Performance figures refer to the past and past performance is not a reliable indicator of future results. Source: UBS Quantitative Investment Solutions.


Historical annual returns of selected asset classes 2000 – 2010

Liquidity Real estateBonds Hedge fundsEquities

Highestreturn

Lowestreturn

2000 2001

Commodities

Diversification and a dynamic, market-driven investment process are key

Market understanding

When analyzing historical annual returns on various asset classes, differences in annual returns become very clear

2002 2003 2004 2005 2006 2007 2008 2009 2010 2011

2


Profit from Market Movements with a Tactical Asset Allocation (TAA)

Interest rate cuts

Bonds outperform as economy slows

Stocks do well when economy initially recovers

Stocks are still attractive (positive earnings effect). Commodities usually perform well when output gap disappears

Cash is a safe haven when growth slows from the above trend, and rising unit costs trigger a (wage) price spiral (inflation risks)

Interest rate hikes

Market cycle



Phase 2Equities

Phase 3Equities & Comm.

Phase 4Money Market

Overweight equitiesUnderweight cash

Neutral equitiesUnderweight bonds

Overweight cashUnderweight equity

Phase 1Bonds

Overweight bonds

3

Ultimate goal of a Tactical Asset Allocation is to profit from short-term investment opportunities without significantly altering the long-term risk profile


Take the guesswork out of investing

By identifying the most important and promising short- and mid-term trends, UBS's global research offers you:

• in-depth analysis of key topics that might shape our future

• objective and private-client-focused investment ideas

• advice on recommended positioning across all asset classes

By combining research expertise and first class investment ideas, we

• translates these key investment topics into specific investment ideas that suit your personal circumstances

• informs you about the different ways to stay up to speed with financial developments

Specific solutions for each themeSingle instruments

Structured products

Managed solutions

Bonds 5%Cash 5%

UK Equity 19%

Manager C

Man

ager

A

Manager B

Commodities 7%

Private Equity 15%

Real Estate 10%

Hedge Funds 10%

US Equity 10.5%

Manager C

Manager AM

anager B

European Equity 4.4%Japan

Equity 2.5%

EM Equity 1.6%

Bonds 5%Cash 5%

UK Equity 19%

Manager C

Man

ager

A

Manager B

Commodities 7%

Private Equity 15%

Real Estate 10%

Hedge Funds 10%

US Equity 10.5%

Manager C

Manager AM

anager B

European Equity 4.4%Japan

Equity 2.5%

EM Equity 1.6%

Funds

Themes cycle

Sell

Buy

Hold



Sell

Buy

Hold

4

Investment decisions should rely on sound information and a well-founded world view


17

Table of Content




• Conclusions


18

What is UBS bringing?

Our experience• 150-year tradition of serving the wealthiest

individuals and families across the world

• Conducted 248 M&A deals in past 5 years, EUR 51bn in value

• One of the world's best capitalized bankswith a Tier 1 ratio of 19.7%

Our advice• Our investment process orchestrates and

consolidates our vast market know-how for you

• Access to all asset classes

• We deliver sustainable absolute performancefor your investments

• Enjoy seamless access to the capabilities and universe of an integrated bank with global reach and local presence

Our long term commitment• Focus on building long term relationship

• Accompany families for many years

Global awards in 2012• Best Global Private Bank for individuals with 1 million to 30

million USD

• Best Global Bank for "Family Office Services"

• Best Global Bank for "Inheritance and Succession Planning"

• Best Global Bank for "Philanthropy Services"

Awards across products in 2012• Best Global Bank for "Range of Investment Products and

Advisory Services"

• Best Global Bank for "Structured Products"

• Best Global Bank for "Commodities Investment"

• Best Global Bank for "Luxury Investment"

Acknowledgment• Best Private Banking Services Overall ranked by

Euromoney Awards

– #1 in 2012 and 2009, #2 in 2010-2011

• #1 Pan European Equity House for the 8th year in a row

You benefit from exceptional advice and an outstanding wealth management offering


19

Q&A

Dr. Giuseppe De FilippoHead South Eastern Europe

Tel. +41-44-237 43 57 Email [email protected]

Thank You


20

DisclaimerUBS AG (UBS) as a Swiss bank and its Hungarian Representative Office are not licensed to provide financial or investment services in Hungary. Products and services are available and provided by UBS outside Hungary

This document and the information contained herein are provided solely for information purposes, they are not to be regarded as investment research, and they are not to be construed as an offer or as a solicitation of an offer to buy or sell any securities or other financial instruments in Switzerland, the United States or any other jurisdiction. Please note that UBS retains the right to change the range of services, the investment products and the prices at any time without prior notice and that all information and opinions indicated are subject to change. Further, asset classes, asset allocation and investment instruments are indicative only. No investment decision relating to securities of or relating to UBS AG or its affiliates should be made on the basis of this document. All investments carry a certain degree of risk and the attention is hereby drawn to such risks which can be substantial. The market in the certain securities may be illiquid and therefore valuing the investment and identifying the risks may be difficult. Some investments may be subject to sudden and large falls in value and on disposition may pay back less than invested. The client should consult the UBS client advisor on the nature of each investment and carefully consider whether such investment is appropriate for the client's situation. Further, tax treatment depends on the individual client’s circumstances and may be subject to change in the future. UBS does not provide legal or tax advice and makes no representations as to the tax treatment of assets or the investment returns thereon, either in general or with reference to a specific client's circumstances and needs. Clients should obtain independent tax advice on the suitability of products, assets or investment instruments before investing and as they may consider appropriate. This document contains statements that constitute "forward-looking statements", including but not limited to management’s outlook for UBS’s financial performance and statements relating to the anticipated effect of transactions and strategic initiatives on UBS’s business and future development. While these forward-looking statements represent UBS’s judgments and expectations concerning the matters described, a number of risks, uncertainties and other important factors could cause actual developments and results to differ materially from UBS’s expectations. These factors include, but are not limited to: (1) future developments in the markets in which UBS operates or to which it is exposed, including movements in securities markets, credit spreads, currency exchange rates and interest rates; (2) the effect of the current economic environment or other developments on the financial position or creditworthiness of UBS’s customers and counterparties; (3) changes in the availability of capital and funding, including any changes in UBS’s credit spreads and ratings; (4) the consequences of the recent Swiss court decision relating to the provision of certain UBS client data to the US Internal Revenue Service, including possible effects on UBS’s 2009 settlements with US authorities and on its businesses; (5) the outcome and possible consequences of pending or future actions or inquiries concerning UBS’s cross-border banking business by tax or regulatory authorities in various other jurisdictions; (6) the degree to which UBS is successful in effecting organizational changes and implementing strategic plans, and whether those changes and plans will have the effects intended; (7) UBS’s ability to retain and attract the employees that are necessary to generate revenues and to manage, support and control its businesses; (8) possible political, legal and regulatory developments, including the effect of more stringent capital and liquidity requirements, constraints on remuneration and the imposition of additional legal or regulatory constraints on UBS’s activities; (9) changes in accounting standards or policies, and accounting determinations affecting the recognition of gain or loss, the valuation of goodwill and other matters; (10) limitations on the effectiveness of UBS’s internal processes for risk management, risk control, measurement and modeling, and of financial models generally; (11) changes in the size, capabilities and effectiveness of UBS’s competitors; (12) the occurrence of operational failures, such as fraud, unauthorized trading and systems failures, either within UBS or within a counterparty; and (13) technological developments. In addition, actual results could depend on other factors that we have previously indicated could adversely affect our business and financial performance which are contained in our past and future filings and reports, including those filed with the SEC. More detailed information about those factors is set forth in documents furnished by UBS and filings made by UBS with the SEC, including UBS’s Annual Report on Form 20-F for the year ended 31 December 2010. UBS is not under any obligation to (and expressly disclaims any obligation to) update or alter its forward-looking statements, whether as a result of new information, future events, or otherwise. Refer to UBS's annual and quarterly financial reports, including the Annual Report 2010 for additional information. These reports are available at http://www.ubs.com/1/e/investors/topics.html <http://www.ubs.com/1/e/investors/topics.html> . No representation or warranty is made or implied concerning, and UBS assumes no responsibility for, the accuracy, completeness, reliability or comparability of the information contained herein relating to third parties, which is based solely on publicly available information. UBS undertakes no obligation to update the information contained herein. UBS specifically prohibits the redistribution of this material in whole or in part without the written permission of UBS and UBS accepts no liability whatsoever for the actions of third parties in this respect.

© UBS 2012. The key symbol and UBS are among the registered and unregistered trademarks of UBS. All rights reserved.

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