UBS Gives U.S. Wealth Managers Recruiting Pep Talk

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UBS Wealth Management USA, which has been on the sidelines of broker recruiting for the past two years, is giving its branch and market managers a pep talk—and talking points—about the value of joining the Swiss-owned firm.

As part of a weekly update to field managers a few days ago, the firm included slides labeled “Telling the UBS Story,” “Recruiting Deal Best Practices” and a “sample deal illustrator” indicating how a $2 million producer can prosper.

The unusual emphasis on recruiting, after more than two years of abstinence, likely indicates concerns from senior management about a steady decline in UBS’s ranks of experienced brokers at a time when recruiting appears in stasis. That trend may have been exacerbated by the firm’s exit last year from the Protocol for Broker Recruiting and by a bonus-payment brouhaha related to soliciting former clients that exploded earlier this year, some headhunters said.

“They’ve been losing people,” said Toby Richey, a recruiter in Houston who does not work for UBS. “They’re trying to ramp it up a little bit to make sure they’re still in the game and that they’re being thought of by big producers.”

The slides sent to managers, which were reviewed by “AdvisorHub,” made no mention of ways to counter questions about the firm’s exit from the Protocol, a pact that gives brokers confidence that they can join a new firm without fear of being sued for contacting former clients. But they gave plenty of tips about emphasizing strong points of the firm’s compensation practices and culture and the deficits of rival deals.

“Some competitors offer backend hurdles with unrealistic hurdles,” the Best Practices Talking Points says, referring to revenue growth rates necessary to qualify down the road for bonuses. “Ask to see competitor deals and look for pitfalls such as deferred payments, cliff vests, unrealistic hurdles, etc.”

UBS does not make its deals “contingent on performance hurdles” and “pays the most in terms of guaranteed dollars,” the firm says in a section summarizing its “overall value” to recruits looking for immediate, intermediate and retirement-planning comfort.

UBS’s recruiting bonuses have been outpaced recently by competitors that have introduced back-end payments tied to hitting future sales targets and by a few firms that have revived offers to top-level prospects of 200% to 300% of the fees and commissions they generated in the previous 12 months. The recruiting talking points urge managers to double-down on the here-and-now payments they can receive upon joining rather than multiples they can receive in the unknowable future.

“Talks in $’s, not %’s,” the Best Practices slide says. “Big numbers capture recruits’ attention.”

In another attempt to sway attention from rival offers, the slide refers managers to the “deal illustrator” chart showing the multi-million-dollar totals that advisors can earn over 19 years of bonuses with longevity incentives. It makes “the potential difference in deal expectations seem minimal,” the Best Practices slide says.

The presentation does not include new information on offers that managers can make or on 2019 compensation, but does say that “deals are customized based on strategic fit and needs of the specific recruit.”  That indicates that the firm may be concerned that complex managers have fallen behind the “soft” target they have been given of bringing in at least one new hire this year among UBS’s approximately 80 geographic “markets” in the U.S.

“I haven’t seen any sort of movement to UBS,” said Louis Diamond, a recruiter with Diamond Consultants in New York, who recruits out of UBS. “They’re spurring on their managers…to go out there and find the right people.”

UBS has had some recruiting successes this year. In June, it picked up a former Merrill Lynch ultra-high net worth broker in Boston. It added a Wells Fargo team with $400 million in client assets in San Jose, Calif., in March.

“We continue to focus on, and invest in, our advisors who are here,” UBS spokesman Peter Stack said, noting that the firm has not shifted its strategy.

“[W]e continue to selectively add advisors who fit our model, are among the most productive in the industry and those who will benefit from joining, growing with and retiring from UBS,” he wrote in an e-mail.

UBS’s headcount of advisors in the Americas (including a small group in Latin America) as of June 30 was 6,937, less than half the size of its traditional wirehouse competitors Morgan Stanley Wealth Management, Merrill Lynch Wealth Management and Wells Fargo Advisors. In the first half of this year, the firm’s brokerage count has declined by a net 33, according to its earnings reports.

The Swiss banking giant and its U.S. executives have repeatedly emphasized that they are less concerned with brokerage force size and more focused on profitability per broker. At the same time, they have told investors that Tom Naratil, the co-president of wealth management who took over the Americas business in January 2016, has whittled down the more than $3 billion of forgivable recruiting loans that was depressing the Americas unit balance sheet when he took over. The number at the end of the second quarter fell below $2.4 billion.