An open letter to Robert McCann at UBS

Congratulations on taking over as head of the U.S. wealth management business at UBS.

It's quite a big job. But I'm sure you calculated the odds: if you succeed in turning around the bank's retail business — whether they sell or keep it — you can go on to even bigger things, just as James Gorman has done at Morgan Stanley.

If you do only OK, that's not so bad either. Everyone knows that UBS is in a bit of a pickle, so if you can't turn things around, it won't be your fault alone.

But you face some big challenges. As you said yesterday when UBS put you in the spotlight, many people don't trust large firms, nor the people who run those firms. “We need to win and earn that trust back,” you said.

How right you are.

But how are you going to do that — and rein in costs too, as you also mentioned?

While you may refrain from paying big bonuses or granting favorable loans to lure brokers from the other wirehouses, you can't go too far. Make UBS less attractive or trim the grid too much and you'll lose the source of your revenue.

At the same time, running a wirehouse that's a me-too clone of Merrill or Morgan or Wachovia is not going to do much to win over new clients. As it is, there's not a whit of difference among the wirehouses in the mind of the investing public. You're all big and do great things for rich people, at least according to your ads and commercials. Your brokers aren't much different either, since so many of them have hopscotched among these firms throughout their careers.

So where are the savings, and the trust, going to come from?

Well, for savings, you can always squeeze out some of the “fat” in Weehawken, N.J. That's where UBS's support personnel toil, far from the canyons of Wall Street or the glamor of the UBS building in Midtown Manhattan, and hard by the mouth of the Lincoln Tunnel.

Of course, cutting support for brokers makes it more difficult to retain them in the long run, but maybe your plans are more short-term-oriented.

If so, you know how to juice the numbers in retail brokerage: shake down the product companies. While pay-to-play is supposed to be dead in the municipal bond business, it's alive and well in mutual funds, insurance and other areas of retaildom. I'm sure the fund companies are looking forward to their meetings with you.

As far as trust is concerned, you can always take the radical step of making UBS reps fiduciaries. That would gain trust and set UBS apart from the crowd, but let's not get crazy; it would ruin the profit picture for many years.

So your job, it seems, will be one of orchestrating an illusion of fiduciary-ness and service, while not providing too much of either.

Good luck.