UBS Reverses Course on Gagging Brokers Who Leave
UBS Wealth Management USA has junked a controversial policy that would have affected brokers’ 2018 bonuses and freedom to move. The firm is also reverting to a retirement account compensation plan more straightforward than one created last year, according to messages to brokers and managers reviewed by AdvisorHub.
The bonus change reverses a policy announced earlier this year aimed at curbing attrition at the firm. The policy would have restricted UBS’s almost 7,000 brokers in the Americas from calling clients for 12 months if they accepted 2018 “Strategic Objective Awards” (SOAs) and then left for another firm.
“As a leadership team, we strive for openness, for always listening to feedback and for taking action to better serve the needs of our clients, our employees and our shareholders—and that includes changing course when necessary,” Wealth Management USA head Brian Hull and “investment platforms and solutions” cohead Jason Chandler wrote to brokers. “A big part of that is encouraging dialogue and creating a culture of transparency and accountability.”
In a separate “Talking points for field leaders to advisors,” the company spelled out a strategic error in the policy of trying to restrict broker mobility through compensation restrictions.
“[W]e’ve found that in the age of social media, the non-solicit language has not impeded the FA’s ability to have their [sic] clients join them,” the memo said. Brokers UBS hired from other firms in 2018 who were subject to non-solicit agreements were “not impeded,” the Talking points missive said, with a hint of self-congratulation. “[W]hen we contrasted the value of the non-solicit versus its impact on an Advisor’s focus and motivation, it made sense to us to change our approach.”
UBS may be hoping that its change of heart will curtail a short-term exodus of experienced advisors who were considering leaving before the restrictive language was to have taken effect in February. Brokers leaving now will be subject to non-solicits only until balances on their forgivable loan notes are paid off.
“There are a lot of people who are on the bubble and are strongly considering making a move out of UBS,” said Frank LaRosa, a recruiter based in Moorestown, N.J. “They really didn’t want to sign the bonus agreements.”
UBS did not address in the memos the Protocol for Broker Recruiting, the pact it and Morgan Stanley left at the end of 2017 in an attempt to slow down exits by experienced advisors at a time when it has cut its recruiting budget. The agreement allows brokers to take rudimentary client-contact information with them if they join other Protocol firms, without fear of being sued by their former firms.
“A cornerstone of making UBS the best firm for the industry’s best FAs is our compensation plan that focuses on what we value most: productivity, loyalty and growth,” the field leaders’ talking points memo said.
UBS’ missives to brokers and field leaders also said that the firm is lifting a complex compensation formula begun in June 2017 that paid differently on client advisory and brokerage retirement plans, now that the DOL Fiduciary Rule has been vacated in court. As of January 1, UBS will revert to its traditional revenue-based “grid” payout for all accounts, excepting some product-related advisory account or allocation changes subject to a “level-fee” structure.
The firm had readjusted its “Retirement ROA” compensation calculations just before Labor Day, and the ensuing “challenging markets” have “impacted the ROA calculation,” the memo to field leaders said. Several brokers said their pay for retirement accounts was negatively affected in recent months.
UBS also said in Monday’s memos that customers will be told in year-end statements that it does not act as a fiduciary in brokerage retirement accounts or in recommending switches to advisory programs. “The notice will also clearly highlight firm and FA conflicts in brokerage,” the email to brokers said.
The changes in the bonus and retirement account compensation policy were reported earlier on Monday by “On Wall Street.”