Rick Gonzalez has been at the forefront of UBS Wealth Management’s offshore business for the past 20 years. He tells Michelle Abrego about the group’s plans for Latin America and why he never goes on a business trip without his fishing rod.
Commitment to the US offshore market has been increasingly scarce among some key players, but if the length of time Rick Gonzalez has been leading UBS Wealth Management Americas’ international unit is anything to go by, the Swiss bank is in it for the long haul.
From tax compliance to knowing your client, the burdens of the US offshore industry have prompted some to call it quits over the past few years, but the UBS veteran and avid fisherman knows that when waters are choppy, it’s best to keep your line in.
Gonzalez, head of UBS Wealth Management Americas International, has been responsible for much of the firm’s offshore growth over the past 20 years and is confident that there are still plenty of new waters to explore.
‘The challenge with the business is that it’s gotten so complex that some competitors have opted to exit altogether. Some competitors have had to reduce their risk portfolios to a certain group of countries […] and some competitors who are global have actually taken the opportunity to expand.
‘We are one of [the latter] competitors. What differentiates us from many other players in the US is that we’re a large global bank that happens to have a very significant business in the US.’
Businesses evolve and you always have to be looking for the next growth opportunity
UBS certainly needs no introduction for those in the wealth industry. The global business can count nearly half of the world’s billionaires as its clients, with its Americas wealth management division running over $1.2 trillion in client assets. The Swiss bank’s wealth franchises have reported strengthening balance sheets since the firm refocused on private clients in 2011.
‘We want to keep growing this business,’ says the 56-year-old, a native of Puerto Rico.
‘The opportunity is still significant. We can’t realistically say “Oh, we’re going to stay with the same team of bankers in the same office and do just fine.” Absolutely not. Businesses evolve and you always have to be looking for the next growth opportunity.’
UBS recently put this evolution theory into practice, announcing it was merging its Americas and global wealth management divisions under one banner as part of its efforts to streamline its business. Gonzalez’s role will remain unchanged under the new structure.
From experience to wisdom
Ever since he first started working in its offices at 550 Biltmore Way, Miami in 1998, Gonzalez has been at the heart of the bank’s offshore advance.
Back then, as a branch manager for UBS’ Coral Gables outlet, Gonzalez was put in charge of the firm’s US-based international advisory team, which was made up of between 11 and 15 financial advisors.
‘At the time, I said “We need to hire. The potential in this business is tremendous.” The office agreed and I started hiring advisors from different competitors. That office became the business I run today,’ he explains.
You can’t get by in wealth management hanging up on people
Gonzalez still works out of the same building, but now oversees 478 private banking and wealth advisors across New York, Florida, Texas and California, as well as outposts in Hawaii, Puerto Rico and Uruguay, serving clients in 65 markets across the world.
‘It has been very rewarding because not many people get to say they pretty much hired everyone they work with. It has been very successful – not that we haven’t had our challenges.’
Gonzalez recalls that it was in the early 1980s he first caught the investing bug. He was an intern shadowing a trader on the New York Stock Exchange who worked for a small brokerage house owned by a family friend.
‘I almost got run over like three times,’ he says with a chuckle. ‘I thought it was a fascinating business. There was so much to learn and it was changing so fast. It definitely wasn’t dull.’
As an accounting major, he joined Deloitte, where he was looking after financial businesses. Eventually, he got a foot in the door at Lehman Brothers, where he worked as a trader’s assistant for a few years before joining UBS as a trader in 1986.
He soaked up the life of a trader in New York until the collapse of the bond market in 1994 prompted him to reconsider his career path. ‘When you go through something like that you kind of rethink whether you’re in the right job.’
It was then that he decided on a career in wealth management. His big opportunity was handed to him by the then head of UBS’ private client group, Mark Sutton, who retired as chairman and CEO of UBS Americas in 2006. Gonzalez still counts him as a mentor.
Sutton gave him his start in the industry, but not without some words of advice about interacting with people in wealth management.
‘One clear example he gave me was that […] you can’t get by in wealth management hanging up on people. I was very much a trader – loud and quick on phone calls. That’s what traders did,’ Gonzalez says.
Today, in an office full of photos of him smiling alongside family and friends and hearing about 20-year-long client relationships he has developed (he spends the last two days of every week in client meetings), it is hard to imagine a time when Gonzalez might not have been a people person.
Even harder to imagine is a time when wealth planning was less complex.
‘When I started in the business, quite frankly, tax compliance was not a hot topic. It was almost considered an afterthought. In the wealth management business globally that has now changed dramatically.’
Over the course of 2017, UBS strengthened its fiscal compliance, making sure its clients were fiscally compliant in their home markets, especially with regards to any financial assets they hold offshore.
‘We have taken a perhaps more aggressive approach on that front than our competitors, but as of the end of 2017 we’re done with that important initiative,’ he explains.
‘Some clients have said “I’m not going to sign that piece of paper” and transferred their money elsewhere, but at the end of the day if we’re going to be in this business in the long term we need to be clear to our clients what we stand for.’
For Gonzalez, there is simply no excuse for having undeclared client funds on the books. It is estimated that more than $200 billion has been unlocked by recent tax amnesty programs in Argentina, Brazil, Chile, Colombia and Mexico, and the participation from clients has been ‘overwhelming’, Gonzalez says. ‘That’s a clear sign that our clients want to be compliant.’
He adds: ‘One market that I was particularly concerned about – with regards to participation in the local tax amnesty – was Argentina, but the volume of participants was overwhelming.
‘I was worried. When you approach a client and you ask them to sign a piece of paper attesting to their tax compliance, it’s not an easy thing to do. Especially when it has been a client relationship for 10 years and they’re like “You don’t know this? [...] why are you asking for this now?”
‘Shame on us as an industry for not asking about it before.’
Reeling in recruits
In June 2016, UBS Wealth Management Americas revealed plans to cut advisor recruitment by 40% and put in place a partial hiring freeze.
However, this freeze has now thawed and UBS has pulled out of the Protocol for Broker Recruiting – a US pact that allows brokers to take limited client information with them when switching firms without the threat of lawsuits and arbitration claims.
Over the past few years, the protocol has lost much of its protective power. A number of smaller broker-dealers and registered investment advisory firms have become signatories, allowing them to recruit from the bigger players with little traffic in the other direction.
‘What happened last year in our business was that many of us chose to step away from the table because the business of recruiting advisor talent was becoming very expensive. We will continue to recruit but we will do so opportunistically,’ Gonzalez says.
‘If we would hire 35 in a given year, I wouldn’t mind bringing in another 18 or 20 in today’s environment.’
One of his main focuses for 2018 is the professional development of his team members and increasing efficiency.
‘Our main strategy is focused on organic growth, which is basically growing client assets with our existing advisors. One of our best sources of growth historically has been directly from our “same store” advisors.
‘They are not only experts in developing new client relationships, but they also continue to effectively grow the share of the wallet from their existing client base.’
One question Gonzalez is currently considering is whether the international business should position itself deeper in the Latin American market.
Options include potentially opening an office in Argentina. The country’s renewed potential as a thriving financial service hub has been attracting a number of external wealth giants, with UBS rumored to be among them.
‘There’s a lot of talk about Argentina,’ Gonzalez explains. ‘Should we be closer to our clients? These are the sorts of discussions we’re having. In the end, we might not commit to having a particular presence in the market, but these are dialogues I have with our peers across the Atlantic and the Pacific. A lot of the conversation is about how we can serve our clients better.’
Mexico is currently the international unit’s single biggest market, Gonzalez adds, and within Latin America he is focusing on growth in Mexico, Brazil and the Southern Cone – where financial prosperity is expected to accelerate significantly thanks to new market-friendly leaders.
‘If you had asked me two years ago, I would have said that our market share [in Argentina] would likely not grow, but now I am confident that it will.’
Client proximity, Gonzalez believes, is increasingly important in this business, but it is far from straightforward to achieve. Like fish at the end of a line, international banks are constantly popping in and out of Latin America in response to regulatory environment changes. Over the past few years, increased compliance and technological advances in the financial services industry have led many firms to close down their local offices in favor of centralized hubs.
This has helped cement Miami’s place in the wealth market, and as UBS’ largest booking center, it will always have a place in the offshore world, Gonzalez says.
‘Frankly, I don’t think that a lot of the global banks are going to spend fortunes on bricks and mortar locally to create gigantic back offices and custody platforms when those platforms are already available through global booking centers in the US and Europe.
‘I think we’re going to see more alliances between global providers and local providers to increase the service platform. Eventually that’s going to be an edge, especially with your larger markets.’
Flying and fishing
A week rarely goes by without a flight featuring somewhere in Gonzalez’s diary. He makes a long-distance trip to either Europe, Latin America or Asia at least twice a month, clocking up at least half a million miles a year.
As a keen fisherman who has had a passion for the sport since he was a child in Puerto Rico, he makes sure to take a fishing rod along, just in case.
‘I have been known to travel with fishing rods to many of the markets I visit in case I get some spare time,’ he says. His experience ranges from fly fishing to big game, and through client relationships, he has also picked up hunting – specifically the glamorous tradition of group ‘perdiz’, or partridge hunts.
‘It’s something I’ve always enjoyed doing with colleagues and clients, as well as my son,’ Gonzalez says. His son has even picked up on this passion, becoming a professional bass angler. ‘It has bonded my relationship with my son for many years,’ he adds. With a bit of luck and the right bait he will net another big client on his next business trip.