UBS' American brokers will have to work harder for their bonuses. The Swiss bank is reporting unveiling a new pay scheme that hits its formerly untouchable U.S. top producers the hardest. Why?
The Swiss bank is raising the requirements for its U.S.-based brokers to trigger bonuses, U.S. trade publication «Advisor Hub» reported this week. The move affects all ranks of UBS' 6,000-odd American brokers, but a swathe of mid-level and top producers face especially steep hikes.
«The big surprise is they usually try to leave the big producers alone, but they really took it to them,» an UBS manager who declined to give their name told «Advisor Hub». The change comes as UBS attempts to wriggle free of its stockbroker identity, born out of its 2000 acquisition of Paine Webber.
Ardent for Brokers?
The reining-in can be understood as an effort to wring business more from clients: effectively, UBS is telling its brokers they need to generate more commissions and fees in order to earn the same level of pay. But the focus on«grid bands» for top producers is unusual for wirehouses, which have tended to leave its highest-producing brokers in peace.
Another, more plausible explanation is tied to UBS' years-long efforts to segue to a wealthier caste of customers in the U.S., from brokerage clientele with less than $100,000 in funds. The compensation move may indicate that UBS is no longer as ardent about brokers – and is keen to enlist more private bankers with more complete skills in planning, structuring, and succession instead.
Counter to Rivals
After a megamerger last year, UBS began putting products and infrastructure in place to cater to the ultra-rich in the U.S., which still represents the largest wealth market in the world. It has hiked lending book for the super-rich, and put the unit's business under Joseph «Joe» Stadler, a veteran Swiss banker.
This runs counter to some of UBS' competitors in the U.S.: Goldman Sachs isn't your typical U.S. private bank, but is going down-market with affluent and even retail clients under a push named Marcus (for its founder, a German investment banker).
crosshed
J.P. Morgan, also a big wirehouse competitor, is reportedly carving out clients that aren't super-rich into a new unit separate from those with more than $25 million, «The Wall Street Journal» reported. UBS' broker pay changes follow similar ones made by far larger rival Morgan Stanley last month.
UBS is also reportedly slimming down and introducing «hubs» to cater to those ultra-rich clients, «Advisor Hub» reported separately. This reverses a decision to expand its four major regions into six less than one year ago.
The changes in pay and structure coincide with a new management set-up under co-heads Tom Naratil and Iqbal Khan, whom it poached from Credit Suisse. UBS has repeatedly emphasized that it is better-placed to capture the super-rich in the States because it maintains offices throughout the world, including in Britain, China, the Middle East, the Americas, and Europe.
