Jared Dubey is one of a select few advisors to be part of the UBS Global Family Office, which is a joint venture between UBS Investment Bank and UBS Wealth Management that focuses on extremely wealthy clients. This is a demographic that, from the perspective of a financial advisor, has the characteristics of global institutions. The super-rich are essentially becoming transnational citizens, which means advisors such as Dubey are striving to seamlessly deliver family office services to them all over the world.
Prince: Tell us a little bit about the people you work with.
Dubey: Most of the people I’m dealing with are the heirs of extraordinarily wealthy families, many going back generations. Some of them have significant assets in their own name, while others are intimately involved with their family’s wealth.
While my clients are families, they act as institutional investors. They all have at least $100 million in assets, qualifying them as major U.S. institutional investors, but most are billionaires. The $100 million minimum threshold is necessary because of SEC Rule 15a-6, the unregistered foreign broker-dealer exemption. From a regulatory standpoint, my clients have to qualify as major U.S. institutional investors in order for us to have unregistered foreign financial intermediaries interact with them.
Prince: Why is that important?
Dubey: The people we’re talking about are best described as transnational. They think and act globally, often have multiple residences or family members in different jurisdictions and, more importantly for our purposes, their investing crosses borders. It’s my role to help ensure, on a comprehensive basis, that my clients are fully aware of and appropriately compensated for the risks they assume. And with this clientele, it’s essential to address all the fiduciary, financial and legal considerations irrespective of locality, as well as have the flexibility to think creatively about solutions.
This requires sophisticated local expertise that goes well beyond the scope of the traditional, U.S.-centric wealth management; we need the optionality to work with foreign entities and experts to develop the most appropriate solutions for global investing. And we have to do it in a way that ensures continuity of service and interests across jurisdictions and generations.
Prince: When it comes to investing, what are your clients doing?
Dubey: We’re able to help them understand and address all asset classes within their overall asset allocation framework. This is very important to them, as they usually invest in non-traditional assets, have varying liquidity and cash-flow requirements and, often, hold anchor assets such as multinational private businesses or conglomerates. Ultimately, this subjects their asset bases to disproportionate currency, market and geopolitical risks. We help them strike an appropriate balance between risk and reward across various asset classes and jurisdictions while staying independent from the traditional short-termisms of the investing landscape.
Along with capital preservation, an increasingly important focus for a lot of the inheritors and their families is aligning their personal investment philosophies and value sets with their investment decisions, or what we call values-based investing. Values-based investing can range from portfolio screening for socially responsible investing, which looks to exclude investments that pose significant sustainability or other environmental, social and corporate governance risks, to investing in for-profit social enterprises that may have developed strong strategies to deal with environmental and social challenges. Many of our clients want their portfolios to complement their values, and it’s now possible to do so without compromising return.
Prince: These wealthy inheritors apparently are interested in “doing good.”
Dubey: The inheritors I work with are committed to doing good. That’s not to say a lot of them are not astute businesspeople, but they’re very much focused on using their wealth in transformative, scalable ways to better society. This focus is growing with both our clients and within the greater investment community. As an example, it was a topic discussed often when I was at the World Economic Forum in January, and the most sophisticated wealth-holders and influencers are taking their role as global stewards seriously and realizing sustainability is a key driver of innovation. And in working with them, it’s really interesting to see how innovative uses of capital can generate both social and financial returns. So, yes, doing good has definitely become a driving motivator for the families I work with.
Prince: Can you give us a couple of examples?
Dubey: One example is a family in Latin America that’s on the cutting edge of innovation in operational philanthropy. They were early adopters in allocating a large share of their conglomerate into a foundation, and have used that foundation to invest in social enterprises and really move the barometer on the quality of life to the bottom of the pyramid in their country. Their aim is to provide a full-spectrum solution, so they’ve built insular communities that house developmental education and vocational schools, microfinance facilities, notaries, etc. In doing so, they’re addressing a number of traditional poverty traps. In the end, they help tens of thousands of people a year to cultivate a sense of dignity and help develop an entire new consumer base in a real triple-bottom-line benefit.
Another client, inspired largely by his family’s philanthropy, has committed himself full time to empowering people across the globe to document their lives, to tell their stories and to learn the power of journalism in effecting social change, by providing cameras and photography education to children. So far, over 3,000 people have entered programs provided by his 501(c)(3) in 12 countries, including in the world’s newest country, South Sudan. Interestingly, he’s developed several sustainability initiatives in his organization, and now works with large foundations in a number of countries to document their activities on the ground to boost awareness. He’s also built a tremendous library of photo content from otherwise uncovered and inaccessible regions, which he’s licensing to various outlets, driving the organization’s sustainability. He’s 25.
Prince: How do you fit in?
Dubey: I specialize in helping develop and deliver philanthropic and impact investment solutions to these families. We usually start with a comprehensive assessment of the financial situation and their philanthropic or impact goals. Very often, I’m involved with helping the inheritors define or refine their philanthropic agenda with a focus on sustainability and maximizing impact.
Then my team and I deliver an array of advisory services. This covers everything from structuring the assets that are being used to support social causes to the way the monies are managed. It also includes, for example, how to leverage up the gift-giving ability of a foundation. There are a lot of very sophisticated ways to enable wealthy families to maximize the impact of their giving, and we work very closely with them to make this happen.
Another role I play is philanthropic matchmaker. While all of the families I work with are extremely confidential, this has proven to be central for a number of wealthy families actively seeking this connectivity. I’m basically introducing philanthropically like-minded individuals to each other on a global scale. However, it’s a whole lot more involved than just making an introduction. It takes an awful lot of time and effort to make sure there really is an alignment of not only their philanthropic agendas, but that they’re likely to get along and work cooperatively. By putting in all this energy, when I connect families they’re able to get better results than they could on their own.
Prince: You talked about investing and philanthropy. What other services do you provide these wealthy families?
Dubey: My team and I can deliver the range of family office services on a global scale, and we often do.
In the first place, UBS has an exceptional platform for working with very wealthy families that act like institutions. Our money management capabilities are able to do a great job of addressing the needs of the inheritors and their families throughout the world. We take everything into consideration, from currencies to local markets and political risks, to uncertain regulatory environments.
For me, the ability to tap into the state-of-the-art resources we have out of Switzerland is very important. For example, using these resources we’re able to help these families establish their own family offices. Or, where the wealthy family has a family office, we can often show them how to enhance their current arrangements. Last year, the UBS Family Office authorities out of Zurich were instrumental in setting up more than 100 single-family offices.
Also, we have the expertise to help them with all aspects of family governance. Here we help the family consider four types of capital: family capital, business capital, financial capital and social capital. The objective is to put in place a family strategy, including the organizational structures, that enables the wealthy family to work together most effectively and create opportunities for family members, as well as ensure a smooth transition of resources from one generation to another.
For these types of clients, on the financial services side, they’re also at the top of the class. Aside from money management, the firm has extensive expertise and capabilities across the board. Although we aim to keep everything as simple as necessary, we do have the ability to get extremely complex should the situation warrant. For example, we have the ability to deploy some interesting leveraged credit spread opportunities that take advantage of rolling, near-term interest rate variances across jurisdictions. We can both lever and unwind easily, and it provides our clients with additive value in their mandate.
Prince: Do all the services you provide come from UBS?
Dubey: My first and foremost objective is to help my clients. While UBS, as I’ve discussed, is great for many services, they don’t do everything. There are a number of other services that very wealthy families need that are outside the expertise housed at UBS. And it’s our job to ensure that all of the intermediaries are playing their proper role, and I’m not talking about just banks. I’m talking about attorneys, accountants, consultants, risk managers and all of those critical components along the value chain in managing a family’s wealth.
Legal expertise, for example, is a set of services where my team and I have a well-developed network of attorneys. For example, when one of my clients was interested in acquiring a private company, beyond what UBS could do, we brought in an excellent M&A attorney who not only works with some of the world’s largest private equity firms but who also is renowned for working with high-profile personalities.
Impact investing, or investments in for-profit enterprises that provide social benefits, is another example of where we utilize outside partners. When families come to us to deploy impactful capital, we bring in an advisory firm with a team of quants that specializes in direct impact investments in emerging and frontier markets. After determining a suitable percentage to allocate to impact within the framework of an overall asset allocation, we then work closely with this team to source and fund impact deals, to structure deployment vehicles, to address local jurisdictional concerns and currency hedges, and so on. And as our clients are actively seeking this advice with increased frequency, we need to work with leading providers to develop meaningful, coordinated solutions.
One more important example is concierge health care. Many of the inheritors are world travelers. The ability to access exceptional medical care 24/7, anywhere in the world, is essential to them. When this level of proficiency is required, we bring in WorldClinic. Just to be transparent, I’m a WorldClinic client, as I travel all over the globe to work with these families.
Prince: What do you see as the future for your business of working with ultra-wealthy inheritors?
Dubey: Overall, the amount of wealth being created at the high end is growing exponentially. There’s a widening gap between the wealthy and the ultra-wealthy. These inheritors and their families are looking for answers and an ability to make things happen, which is what we provide. This is all good for my business.
More importantly, I have the same outlook as many of the wealthy inheritors I talk with. Their heavy focus on philanthropy and impact investing is something I’m personally and professionally also focused on. Their interest in learning how to better deal with financial issues matches up with the way I prefer to operate. Helping them learn about their options—both from a philanthropic and financial perspective—is a positive for them and my team.
Prince: Lastly, what’s the biggest negative working with ultra-wealthy inheritors?
Dubey: I’d say the travel, but I enjoy that part, too.
Prince: Thank you, Jared, for your time and insights.
