In Practice February 10, 2007

UBS Seeking Both Assets and Advisers in Ultra-High Net Worth Market

By the end of 2010, UBS, the world's largest money manager, plans to have $250 billion in ultra-high net worth client assets under management, and about 400 advisers serving those clients.
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That is a significant increase over the $110 billion under management today, with only 140 advisers serving the ultra-high net worth clients, according to a Reuters report last week. Although the firm has 8,000 advisers throughout the country, only about 100 of those will undergo training to become part of the expected 400 ultra-high net worth advisers; the report said the rest of the group will come from rival advisory firms.

Reuters quoted John Straus, head of UBS private wealth management in the United States, as saying that the company expects to continue to grow market share from competitors and plans to be the biggest ultra-high net worth wealth manager by 2015.

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UBS currently only has one office in New York City that is dedicated to serving accounts with over $10 million, opened last year. However, the firm has plans to open five more such offices during the year, in Atlanta, Georgia, Chicago, Illinois, Los Angeles and San Francisco, California, and Stamford, Connecticut, according to the Reuters article.

Compliance February 10, 2007

Segal Issues Reminder about PPA Changes to Participant Benefit Statements

Segal has issued a reminder that the Department of Labor’s (DoL) new requirements for individual benefit statements require changes to participant plan statements.
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The Pension Protection Act (PPA) requires that individual benefit statements are provided automatically to participants and beneficiaries on a quarterly basis for DC plans that allow participant-directed investments; annually for DC plans that don’t allow participant-directed investments, and every three years for DB plans to active or vested participants.

In addition to changing the frequency at which statements should be issued to participants and beneficiaries, the law also added to the information that should be included on the statements:

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  • DC plan statements must include the value of each investment in an individual’s account as of the most recent valuation date;
  • DC plans that allow for participant-directed investments must describe the importance of investment diversification.

According to Segal, the key provisions in the DoL guidance are as follows:

  • Defined benefit plans are not required to provide statements until at least the 2009 plan year;
  • Statements must be provided within 45 days after the end of a period;
  • Benefit statements may be delivered in written, electronic or other reasonably accessible form;
  • DC plans that allow participant-directed investments must include language on the importance of long-term retirement security and of a well-balanced and diversified investment portfolio, including a statement that holding more than 20% of a portfolio in one entity may not be adequately diversified.
  • For DC plans that allow all participants to direct investments, the statements must describe any plan limitations on those rights.

The rules are effective for plan years starting after December 31, 2006; however participants covered by collective bargaining agreements get an extension.

For participants covered by collective bargaining agreements in plans maintained under such agreements, the rules are effective for plan years beginning after the earlier of (1) the later of December 31, 2007 or the date on which the last collective bargaining agreement terminates (without extensions), or (2) December 31, 2008.

Multiemployer plan trustees and sponsors of other plans covering a mix of bargained and non-bargained people will have to decide whether to comply in stages, based on the literal effective dates, or to treat all participants the same and comply earlier than might be required for many of the participants, Segal said.

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