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Why UBS is Happy it's Shedding Advisors

By Miriam Rozen April 26, 2019

Wirehouse UBS’s shrinking financial advisor roster shows its strategic plans are succeeding, the bank’s CEO Sergio Ermotti told analysts during an earnings call this week.

UBS’s advisor headcount dropped to 6,790 at the end of this year’s first quarter, down 2% from the same time period in 2018.

“In the U.S., the declining number of FAs is a strategic decision we took a couple of years ago,” Ermotti said, noting the firm’s focus was on retention and narrowcasting its recruiting efforts to focus on adding only advisors serving ultra-high net worth clients.

UBS’s CEO made the comments in the wake of his firm’s wealth management unit’s first quarter profits dropping 21% from the same time period the previous year to $873 million.

“Recruiting as a way to show growth is only good for the top line, but definitely not good for PBT [profits before tax],” Ermotti said and he referenced the high cost of the loans that UBS and rivals traditionally offer FAs to persuade them to switch employers.

Despite the drop in earnings, UBS’s wealth management unit was able to bring in $22.3 billion in net new money in the first quarter of 2019, representing a 4% annualized growth rate, according to the earnings report. That was a stark improvement over the previous quarter, when clients pulled out close to $8 billion as they took money out of falling stock markets.

It’s unclear how much of the net new money in the first three months of the year came from U.S. clients, but $16 billion was in Asia-Pacific, the company says.

UBS has focused on “selective hiring initiatives,” Ermotti said, noting that the wirehouse has built “momentum” behind its campaign to hire FAs with ultra-high-net worth clients.

Although UBS representatives provided no numbers to corroborate those recruiting wins, FA-IQ previously reported an UHW Dallas-based team moved to UBS from Bank of America’s U.S. Trust unit, now known as Bank of America’s Private Bank.