UBS management presented its advisors with news today that some of them interpreted immediately as a likely pay cut next year. The wirehouse’s management has increased the thresholds in the 2020 compensation grid required for FAs to receive the same payouts as they did this year.
Jason Chandler, head of the wirehouse’s U.S. wealth management division, said in a memo to the FAs that “the core components of our 2020 plan are unchanged.” Chandler also emphasized that management had increased “net new business awards”.
Yet none of the six UBS advisors to whom one recruiter, Danny Sarch, spoke with after reps received Chandler's memo viewed the compensation as “unchanged.”
“They are furious, particularly by the tone” of the memo, Sarch says about the advisors. UBS’s management had “chutzpah” to describe a cost-cutting move as "unchanged" compensation, says Sarch, president of recruiting firm Leitner Sarch Consultants.
One advisor using profanity told Sarch his reaction was: “Don’t [expletive] in my mouth and call it a sundae.”
In Sarch’s calculations — based on numbers he was hearing about the grid threshold increases — advisors with $1 million in production who had made $440,000 this year would see that shaved in 2020 by $20,000, all other factors being the same.
None of the advisors he spoke with expressed enthusiasm about the net new business award increases since some of those added as little as 1% increase to payout and the highest awards, 6%, called for advisors to pull in an extra $100 million in new client assets or new borrowing.
The UBS cuts come only weeks after Morgan Stanley also introduced changes to its 2020 compensation grid for FAs that will likely to haircuts for many.
As FA-IQ previously reported, Morgan Stanley raised the revenue the thresholds that many of its 15,000 advisors must meet to get the same payout percentages in 2020 that they received this year.
The wirehouse increased thresholds by about 10%, effective April 1.
The targets of the higher revenue thresholds are advisors generating less than $5 million a year, while the thresholds for advisors generating more than $5 million are expected to remain unchanged.