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UBS Slashes 40% off Advisor Recruitment Targets

June 10, 2016

The U.S. wealth management division of UBS is undergoing major structural changes, affecting its field structure, advisor and field manager compensation, and drastically cutting recruitment targets, FundFire writes.

The wirehouse will reduce advisor recruiting by 40%, according to the publication. The company also plans to revamp its advisor compensation plans for next year, according to an internal memo seen by FundFire.

The plan is allegedly “simpler” and “easier to understand” and is aimed at rewarding loyalty, productivity and growth, according to a press release from the company. This includes bigger payouts for advisors with the largest books, incentives to form teams and an “enhanced program” for advisors leaving the business to transfer their clients within the firm, the company said.

UBS is also cutting several management positions at its home office, but plans to add staff to its field offices, including financial planners, FundFire writes. Other changes include the elimination of eight of the wirehouse’s regions, according to a memo sent by UBS Americas President Tom Naratil to employees and seen by FundFire.

The wirehouse has also replaced its 63 complexes with 43 markets, growing the number of branches from 189 to 208, the publication writes.

Tom Naratil

Naratil, who left his job as UBS CFO to take over the U.S. wealth unit in January, has previously vowed to make the unit more profitable, the Wall Street Journal writes.

He tells the Journal that the overhaul is aimed at eliminating “the bad costs” related to management overhead, recruitment and bureaucracy, shifting those funds toward technology, support staff to advisors and top revenue producers. The company’s goal is better advisor retention rather than recruitment with lucrative sign-on bonuses of advisors plucked from rivals Morgan Stanley, Merrill Lynch and Wells Fargo, the Journal writes.

Naratil tells the publication that no advisor will get cuts in compensation as a result of the overhaul. The new plan will increase cash compensation to advisors generating revenue of $1 million or more, and advisors on teams will be paid based on assets collectively managed, which will likely put many team advisors into higher compensation brackets, the Journal writes. The company will also eliminate “nuisance fees” including ticket charges and offer upfront payments to retiring advisors who commit to transition their clients to other advisors at UBS, according to Bloomberg.

UBS currently has 7,100 advisors and the recruitment scale-back will keep the total between 6,500 and 7,000, compared to more than 14,000 at Merrill Lynch and close to 16,000 at Morgan Stanley, according to the Wall Street Journal. UBS’s current numbers are at the top of their target in large part due to the success of hiring away brokers from Credit Suisse, despite that company’s exclusive agreement with Wells Fargo to recruit its brokers, the publication writes.

By Alex Padalka
  • To read the FundFire article cited in this story, click here.
  • To read the Bloomberg article cited in this story, click here.
  • To read the Wall Street Journal article cited in this story, click here.