UBS is on the front line when businesses face uncertainty. Dean Turner from UBS’s investment office and head for Scotland Debjani Raffan tell Mike Hughes about how they are helping to address Brexit concerns.
By their very nature, entrepreneurs are prepared to face uncertainty. With determination, confidence and the right guidance they can overcome the variety of issues the business world will throw at them. But it takes a generous helping of Scottish spirit - and the support and guidance of a financial giant like UBS - to look at Brexit and see opportunity rather than focusing on the threats presented.
That combination, developed in a political landscape that has a uniquely independent tone, gives Scotland a powerful way forward as the financial rules are being rewritten.
Dean Turner, Economist in the UK Investment Office at UBS Wealth Management, says the landscape is always changing for Scottish entrepreneurs, and they are skilled at making the right decisions in critical situations. “Certainly, the feedback I have had is that there is a very practical attitude towards tackling the many issue that may arise from Brexit,” he said.
“There still seems to be an element of indecision, with firms postponing active decisions until we all have a clearer idea of where the negotiations are going to end up. This is perhaps more relevant for firms who are exporting. However, even for domestic firms, there are concerns, not just about the domestic economy, but also into what impacts there might be on the labour market. We have seen a tail-off in business investment in terms of the headline numbers, but I don’t think we are yet at a stage where firms are aggressively relocating away from Scotland. All things considered, the Scottish economy does seem to be holding up a lot better than expected. Likewise, the global economy remains resilient, proving a strong backdrop.
“My view is that the domestic economy will slow as the year progresses - that seems inevitable looking at the inflation and wage growth numbers. However, I am not overly pessimistic about that because firms in Scotland do not seem to be burdened by a sense of negativity, but have more of a very practical attitude which says, ‘let’s get on with it’.
The spirit of independence that many Scotland businesses have always valued has been magnified by the Brexit vote and the ongoing negotiations and is an ever more valuable element of the region’s economy. It also makes Scotland a different place to do business and emphasises how agile global companies like UBS must be as they cater for the needs of all their clients, whether they are based in Edinburgh or Dubai.
“One of the things that I have noticed across UK regions is that the further you get away from London, the more optimistic clients and firms seem to be about Brexit.” explains Dean. “This is understandable. If we think about the areas of the economy that are likely to feel the largest impact on their trade with the EU, services, in particular financial sector, are thought by many to be most at risk. London is the clear centre of that sector. But there could be some residual impact in Scotland as both Edinburgh and Glasgow are important financial centres.
“Assessing the different perspectives from a UK regional and global perspective, helps UBS’ CIO with understanding the dynamics driving the economic and investment environment.”
That global feedback now includes a fascinating new UBS survey of more than 2,800 millionaires in the UK, Italy, Switzerland, Japan, Hong Kong, Mexico and Singapore to assess how unpredictability is shaping their attitudes and actions. This included 401 millionaires in the UK.
The report, titled “Is unpredictability the new normal?”, found that respondents feel that Brexit will have a positive impact on Britain as a country and on their own financial planning in both the short and the long term. An impressive 51% of British high net worth individuals expect an improvement in their finances in the next 12 months. Two-thirds are optimistic about reaching their long-term financial goals.
And the trust in Britain as a place to put your money is as strong as ever with 81% of UK respondents seeing Britain as a reassuring place to hold or invest their wealth - more than in any other market.
Such resilience in the face of uncertainty can be a powerful asset. And it could grow if the regional strengths of the UK are allowed to flourish, as Dean explains. “I think that over the next decade there is an opportunity for the UK government to take a closer look at its regional strategy. Further devolution and transfer of decisions making to the regions could provide a crucial lift to the UK's current poor levels of productivity growth,” he says.
“One of the clearest ways to boost productivity is to decentralise key funding decisions to local authorities who can set policy to support their areas of expertise. Local input on spending, training, and infrastructure, should mean that decisions are made more timely, and crucially more effectively. If that feeds through in the next decade - as we hope it will - that would benefit the whole economy. The high support for Scottish independence in 2014 laid the foundations for greater devolution, and we expect more concrete steps in the coming years.”
For UBS in Scotland that key analysis and feedback comes from the regional base in Edinburgh where a team of client advisors from diverse backgrounds in corporate finance, corporate banking, wealth planning and asset management provide the gateway to UBS's global network.
Debjani Raffan, the company’s Regional Head in Scotland, agrees that business confidence has not been dampened by the vote to leave the EU. “We are always talking to the entrepreneurs we look after and I know this [Brexit] will not stop them doing business because whatever legislation changes or however the new circumstances affect their business they will find a way around it and continue to grow,” she tells me.
This refreshing opinion is exactly what this country has been saying since the Brexit vote. While many in the UK may have been swamped by concerns and even misguided information about what might happen, in Scotland sound and sensible advice deeply rooted in the country’s specific needs has produced a more measured and confident approach.
Debjani continues: “This is by no means unique to Scotland, but there is an instinctive character to our entrepreneurs that wants to assess and deal with each issue and then carry on with business.
“The entrepreneurial spirit has always been very strong in Scotland and it is evident now that there is absolutely no sign of that changing, no matter what happens.”
With 60,000 people in 54 UBS offices around the world, the extent of its influence is vast, but the company’s reputation as a global leader is well balanced with its experience at the regional level, and the combination of the two is a key attraction for ambitious young companies and an embedded element of the UBS philosophy for Dean and Debjani.
“Our clients have always shown a high level of resilience. The one thing that most of them have said to us is that while it has not always been hugely positive for them - there have been ventures that have failed - but they have picked themselves up and get back on again, which is the very nature of a Scottish entrepreneur who is capable of taking on risk. For them, Brexit is just another risk they will have to contend with.
“Our job as wealth managers is to really get to know our clients and their families so that when the time comes to exit a business, they can focus on that while we can step in and help them manage their own needs.”
Those personal needs will change from MD to MD and the professional needs from sector to sector, and that agility to deal with an ever-changing marketplace is another trademark of the Scottish operation.
“We see that regional relationship as a huge opportunity because there really aren’t any other global banks that have our regional presence. Our clients really like the fact that I can be with them in Glasgow, Dundee or Aberdeen, but they are still working with one of the world’s largest wealth managers.”
Scottish entrepreneurs are embracing change, whether that be political or with regards to what is driving the economy. For Debjani’s clients, the support of Scottish business organisations is invaluable.
“There is a lot of set-up funding here attracting huge businesses like Gareth Williams and his Skyscanner travel company. He made it very clear that he set the business up in Scotland because of the grants from the likes of Scottish Enterprise that were available, which makes it a much easier place to do business, making it so attractive for investors.
“There is an energy here, which UBS particularly experiences as a sponsor of Entrepreneurial Scotland. There is a real buzz when you get into that room full of entrepreneurs.”
Debjani concludes: “It is a really exciting place to be, but challenging as well with the changes coming our way. But as ever, UBS and our Scottish entrepreneurs will be well prepared and ready to get on with business.”
Head for Scotland Debjani Raffan explains how UBS is helping Scottish entrepreneurs realise their ambitions in a fast-evolving economy. Raffan told BQ what she and her team are seeing a year on from Brexit.
Scottish entrepreneurs are pragmatic
“Whatever legislation changes or however the new circumstances affect their business our entrepreneurs will find a way around it and continue to grow,” she says. “There is an instinctive character to them that wants to assess and deal with each issue and then carry on with business.
“We know we have to wait for the Brexit negotiations until we know the full facts, but for our clients it is very much business as usual - nothing will stop them doing what they do best.”
UBS’s approach is simple
“The way UBS has positioned itself since we set up stall here is that we wanted to be the bank for entrepreneurs,” says Debjani, a graduate from the University of Strathclyde who lives in Edinburgh, at the heart of the economy she is helping to grow.
“What we are completely invested in is the people and the families and the wealth they will be generating, with our preference being to deal with people from an early age and at an early stage in their businesses. For them, Brexit is just another challenge they will have to contend with - with us at their side all the way.”
Some sectors are growing rapidly
“We have certainly seen changes in the Scottish business landscape, with huge growth in technology and life sciences, balanced with the continued importance of manufacturing and food & drink, which will always play a big part in our economy, but we are quite agnostic when it comes to sectors because we are dealing with people and their families.
“I see our work here as a lifetime process, and our regional relationships as a huge opportunity because there really isn’t any other global banks that have got this presence. Our clients appreciate the fact that I can be with them in Glasgow, Dundee or Aberdeen, but they are still working with one of the world’s largest wealth managers and having the same emotions and the same ideas that we hear worldwide.
“There is an energy here, which UBS particularly experiences as a real buzz when you get into a room full of entrepreneurs. With their confidence and a good business plan, there will always be wealth generated whatever the environment and that is where we are able to help. Nothing will stop our entrepreneurs and nothing will stop UBS growing our business and making more and more progress in Scotland.”
Debjani Raffan, Regional Head Scotland
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