UBS’ good reputation helped Peter Landry when he started to build a Massachusetts-based branch of the finance giant two years ago. Now the good press is gone, knocked down by multi-million dollar lawsuits alleging deceptive financial advice – yet Landry’s UBS branch is expanding.
This week, UBS announced Landry’s Rockland branch will be moving into larger office space to accommodate the 40 or so employees who’ve joined Landry’s original two co-workers since he opened shop.
About 20 of those employees are financial advisers, joining up from firms like Wachovia, Bear Sterns, AG Edwards and more, Landry said. Since its founding, assets under management have grown to $190 million, and another Boston-area branch is expected to open in August.
This growth is happening in the same state where headlines have blared UBS’s troubles over an industry-wide debacle involving a type of security, while angry investors allege that the firm’s advisers mislead them into making investments that were much shakier than they seemed.
That might be unnerving to some clients, but Landry said he hasn’t seen any negative fallout. Investors stick around because UBS has been able to explain their side of the situa-tion, he said. Landry credits UBS’s immense global status – it’s the No. 1 wealth manager in the world – and its solid long-term reputation for helping it flourish on Massachusetts’ south shore.
Recently, the news around UBS hasn’t been positive. A type of troubled securities – called auction-rate securities – tanked earlier this year and sent many financial investment firms scrambling to appease investors who were shocked to find a supposedly failsafe investment had, indeed, failed.
UBS, in particular, has gotten stung by bad headlines after it sold many of these securities to Massachusetts municipalities in addition to its many other investors. The firm has gar-nered an investigation by Massachusetts’ attorney general, lawsuits from private Connecticut investors to the tune of more than $75 million, and most recently a lawsuit from the New York attorney general.
Landry said other firms haven’t gotten nearly the attention of UBS.
“They’re caught at every firm with these, and there’s no firm that has stepped up like UBS,” he said. UBS, he said, is making loans to troubled investors at essentially the same in-terest rates as their original investment.
“Obviously, it hasn’t hindered growth,” Landry said.
As for financial advisers who’ve come on board, he said, they got interested because UBS has a sound reputation in the industry, and while it and many financial firms are in cost-cutting mode overall, the wealth management division here is getting more resources to work with.
That’s largely because UBS is buckling down on what it does best, said Guillermo Kopp, executive director and global research fellow with Needham-based TowerGroup research firm. While the credit crunch and economic downturn has financial firms hurting, UBS acted by putting its efforts in private banking and wealth management.
They’re moving to do the smart thing; and while every firm has to be careful of bad press or circulating rumors, UBS has acted fast to be as transparent as possible, and is in a strong enough position to carry it through the current problem, Kopp said.
The current economic problem has polarized the financial industry, he said, placing the strong and the weak at ever-farther ends of the spectrum. UBS has the capital to land on the right side.
“They are too large, and too wealthy of a global franchise to be affected badly by these situations and rumors.”
