UBS Wealth Americas Profit Hits Record with Fewer Brokers

UBS Wealth Management Americas reported record profit in the fourth quarter and positive net client flows even as its advisor force continued to shrink.

The Americas Wealth business, which includes around 6,000 advisors based in the U.S. as well as a few hundred in Latin America and Canada, earned $386 million in the quarter, up 54% from $251 million a year ago. The higher results were driven by growth in fee-based revenue from higher client assets, credit loss releases and a boost in transaction-based income, the company said.

UBS officials said the performance underlined the strategy shift implemented in the Americas almost four years ago under Global Wealth division cohead Tom Naratil who along with cohead Iqbal Khan has focused on boosting margins in the Americas by cutting back on expensive veteran broker hiring and boosting productivity among a smaller group of advisors.

UBS’s Americas headcount, which is less than half the size of its wirehouse peers, fell to 6,305, down a net 48 over the last three months of the year and down 244, or 3.7%, from 6,549 in the fourth quarter of 2020. The U.S.-based total has fallen to below 6,000, down from more than 8,000 almost 10 years ago, according to internal tallies cited by brokers.

The brokerage force has continued to shrink even as UBS partially revived its recruiting efforts over the past year with a focus on hiring large teams from private banks or firms outside its wirehouse pool.

The Americas region was still the most profitable of the Global Wealth unit’s four geographies and helped propel the division to its most profitable year, drawing praise from UBS Chief Executive Ralph Hamers in his first quarterly earnings call since taking on the role in November.

“Tom and Iqbal repositioned Global Wealth Management to get close to our clients and bring them tailored solutions as well as more of UBS’s full capabilities,” said Hamers, who had previously been CEO of ING Group. “This focus is clearly paying off in GWM’s full-year results.”

Americas-based brokers also continued to turn around the multi-year trend of negative net new assets in the quarter. Brokers added a net $1.4 billion of client assets in the quarter compared to a loss of $9 billion in the year-ago quarter as the firm reported positive net flows in three out of four quarters last year.

That was still, however, well below UBS’s wirehouse competitors, including Morgan Stanley Wealth Management, which reported last week that its 15,900 brokers attracted $66.1 billion in net new assets. Bank of America’s Global Wealth division, which includes around 14,000 Merrill brokers and another 5,000 private bankers and bank-based brokers, added a net $7.6 billion in fee-based flows in the quarter.

Client assets at UBS’s Wealth Americas unit rose 12% to $1.57 trillion. Almost 40% of assets were in fee-based accounts, the company said.

Loans increased 5% sequentially to $72 billion as customers added a net $3.4 billion in new debt in the quarter, which helped to offset losses in net interest income due to lower rates in the U.S., the company said.

UBS also touted that the firm’s “zero management fee” promotion for its own separately managed accounts was paying off with another $26.5 billion in net new money flowing to UBS Asset Management in the quarter from wealth clients, bringing the total to $62 billion since the start of the program at the end of 2019.

The firm’s shift to billing on average daily client balances in the fourth quarter also helped to improve performance in the Americas, the company said.

UBS’s stock was trading hands at $14.91, up 2.62% in as of 12:23 after the company said it will buy back $4.5 billion of shares over the next three years.