Brokers Face Death-by-a-thousand Cuts as Big Banks Nickel-and-Dime
It’s not macro-policy changes such as UBS’s retreat from U.S. recruiting wars that brokers across the industry are buzzing about this summer, it’s the small-ball budgeting that is sending many over the edge.
In recent weeks brokerage firms large and small have been changing policies that brokers say affect their client relations, day-to-day working conditions and wallets in highly exasperating ways.
At a UBS branch in Dallas’s high-end Crescent neighborhood, brokers just learned that as of Sept. 1 visiting clients and prospects can no longer be offered free valet parking. The branch spends big on style and rent “but cannot afford 1k a month” for parking, groused a broker, speaking on condition of anonymity.
A UBS spokesman did not respond to requests for comment on parking and other costs that brokers have been asked to absorb.
SunTrust Bank’s more than 400 brokers got word this week that they should arrange to work with “premier bankers” on their teams three Saturdays a month, particularly if their branch is behind in its revenue plan. “It was presented as an ask, but it was a mandate,” said a broker who said the directive followed a decision by the Atlanta-based regional banking giant to cut payouts by 2% for brokers who produce less than $350,000.
“Like many financial institutions, we encourage our premier bankers and financial advisors to meet with our clients when it’s most convenient for them,” a bank spokesman wrote in an email. “For many of our clients, Saturday might be the most convenient day of the week to meet.”
Morgan Stanley, the biggest brokerage firm as represented by its advisor workforce of almost 16,000, recently cut plant-maintenance services at branches and offices, setting off mutterings by frustrated brokers who also are warning clients that account fees are about to rise if they insist on mailed statements.
It’s not just local-office attempts to rein in costs that brokers are discussing. More firms are escalating ticket charges for customer trades and clipping payout or revenue credit for brokers who discount trading prices from posted rates.
At UBS, brokers were recently told that the firm will no longer cover the cost of mutual fund analytic research services from Dorsey Wright and Zephyr Associates, while Morgan Stanley is shifting free-to-broker equity research coverage from Standard & Poor’s to what several brokers consider an inferior product from Morningstar.
Many of the changes are occurring at brokerage firms owned by big banks that are stripping expenses corporate-wide to cope with heightened capital requirements and constraints on traditional sources of revenue. Morgan Stanley, for example, has laid out plans to cut its annual costs by $1 billion by the end of 2017 while Zurich-based UBS AG aims to eradicate $2.1 billion in annual costs by the same deadline.
Parking, plants and research subscriptions pale next to decisions at many banks to exit entire business, but It’s the nuisance tactics that has many brokers boiling over.
“The littlest thing sets them off,” said a former wirehouse branch manager who spoke on condition of anonymity because he still works with many firms and advisors. “It’s the ticky-tacky [stuff] that gets them talking to recruiters.”