EXCLUSIVE: UBS Clawing Back FA Overpayments
UBS Wealth Management USA told thousands of advisors this week that they were overpaid throughout 2018 as a result of an error by the firm’s payroll processor ADP, and will have to return money to the firm, according to a memo reviewed by AdvisorHub.As reported earlier, UBS discovered the improper payroll deductions on forgivable-loan amortizations this year. Jason Chandler, head of the firm’s approximately 6,300 U.S. advisors, announced details of the issue on a call Tuesday, according to several brokers and managers.
UBS’s human resources department followed on Wednesday with an email to affected brokers that included a “reconciliation of all impacted loans since inception,” a call-center number to answer questions and a proposed payment reconciliation plan.
“[W]e understand the serious impact that this issue may have on you and sincerely apologize for the issue and any inconvenience it may cause,” the email said.
The payroll processing glitches included some “overcollection” that will be returned to employees, according to the memo. However, advisors and managers said they were told that “uncercollections” are at the core of the issue, and affect about 4,000 employees.
Many UBS veterans owe only small amounts based on the small part of their performance bonuses tied to forgivable loans, but those hired more recently who received lucrative upfront payments owe thousands of dollars, according to several brokers and managers.
UBS Wealth USA bulked up its advisory force under its former president, Robert McCann, after he joined from Merrill Lynch in 2009. The hiring binge left its Swiss banking parent with an overhang of more than $3 billion of amortizing recruiting loans. Current UBS Americas President Tom Naratil severely cut recruiting budgets after taking the reins from McCann in 2016.
One broker who joined UBS from another wirehouse in the past ten years said he owes about $200,000 that will be deducted from his paychecks over almost two years, while a longtime branch manager said about one-third of brokers at his office owe just $300 to $400.
Neither they nor other advisors reached by AdvisorHub said they knew of anybody who is owed money.
A UBS Wealth USA spokeswoman did not return requests for comment on the range of money under- or over-collected nor on how many advisors were affected.
One advisor said his branch manager told him that UBS may bring litigation against ADP.
An ADP spokeswoman did not immediately return a request for comment. She had earlier told AdvisorHub that the payments giant and UBS had reached an agreement “on the best course of action” to resolve the recurring-loans processing issue.
The paycheck errors ifollow the firm’s controversial 2018 decision to impose customer-solicitation handcuffs on advisors who accepted performance bonuses, known as SOAs (Strategic Objective Awards) in UBS-speak. After a strong backlash from advisors, the firm modified the policy.
The pay-deduction errors “occurred [sic] in 2018” and accurate processing resumed as of February 2019, the H.R. memo says.
“Again, we are sorry this happened,” the memo concludes.