UBS Wealth Americas Slashed New Broker Hires by 54% in 2016
UBS Wealth Management Americas boss Tom Naratil appears to be making good on his vow to curb expensive recruiting costs.
The U.S.-based arm of the Swiss banking giant hired 178 brokers in 2016, down 54% from 2015, and not enough to replace the 293 advisors who left the firm during the year, according to the annual report that UBS AG filed with the Securities and Exchange Commission earlier this month.
“That’s a big drop,” said Jeff Bischoff, a former UBS Wealth recruiter who now runs his own search firm. With the hiring number slumping from 451 in 2014 to 389 in 2015 and 178 last year, “they’re clearly not in the fight,” he said.
While the recruiting slump may discourage headhunters and veteran advisors looking for high bids, it’s far too early to give a report card on Naratil’s radical strategy to revamp the firm’s operational strategies.
The executive, who took the reins of UBS Wealth Americas in January after serving as chief financial officer of the parent bank, has outlined a plan to eradicate what he sees as a no-win recruiting merry-go-round that disrupts client relations and replace it with a program to fix management inefficiencies and give experienced, productive brokers bonuses to stay in their seats.
A spokeswoman for UBS Wealth Americas did not return requests for comment.
The Swiss banking giant, for its part, indicated in its report that Naratil is doing the job.
“In 2016, as an employer of choice for people at all career stages, we received almost 490,000 applications and we hired 7,886 external candidates,” the annual report said, calling out specifically the “178 financial advisors for Wealth Management Americas” that were hired.
UBS Wealth Americas, an outgrowth of the PaineWebber franchise that the Swiss bank bought in 2000, ended last year with 7,025 brokers, down from 7,140 one year earlier and half the size of brokerage forces at rivals Morgan Stanley, Merrill Lynch and Wells Fargo Advisors.
By at least one metric, Naratil’s expense-cutting campaign appears to be effective. Outstanding forgivable loans made to brokers as part of their recruiting bonuses fell 5% to $3.033 billion as of December 31, 2016, according to the bank’s balance sheet, from $3.179 billion a year earlier. A significant portion of the decline likely reflects loans that have reached maturity or are far along in their amortization cycle.
The falling loan balances and UBS Wealth America’s 52% year-over-year decline in general and administrative expenses followed the firm’s aggressive recruiting of brokers from Credit Suisse’s shuttered U.S. business in late 2015 and early 2016. UBS hired 101 of its rival’s 336 U.S. advisors, and is defending itself against a raiding suit from Credit Suisse, which had negotiated a deal to direct its U.S. brokers to Wells Fargo.