UBS sees recruitment pay off in the fourth quarter

With a year-end windfall of veteran advisers, the firm topped off a year of big gains

Jan 8, 2014 @ 11:25 am

By Mason Braswell

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UBS Wealth Management Americas, the smallest of the four wirehouses by head count, is seeing the fruits of its labor as big investments in recruiting paid off for the firm in 2013.

The firm, which has around 7,100 advisers, pushed its way to the top of the rankings in the fourth quarter, drawing in some $6.3 billion in assets. That outpaced its three wirehouse rivals and accounted for more than a quarter of the $23.8 billion in client assets that changed hands in the last three months of the year, according to data from the InvestmentNews Advisers on the Move database.

For the year, the firm snapped up $17.2 billion in assets in recruiting deals and lost $9.1 billion. While Wells Fargo placed higher in terms of net gains, UBS brought in around $5 billon more on the front end and accounted for almost a fifth of the approximately $90 billion in assets that changed hands in adviser moves last year, according to the database.

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“Everybody is bringing their A game,” said Alois Pirker, a research director for consulting firm Aite Group's wealth management division. “Given UBS' relatively small size, compared to Merrill Lynch and Morgan Stanley, they have been punching way above their weight.”

The database compiles moves that were publicly reported by firms. It tracks general trends and larger adviser moves but is not an exhaustive list of all the transitions. Firms often do not report moves of smaller veteran teams or advisers who leave. In addition, not all assets an adviser may have managed at a previous firm will follow to the new firm.

But the recent recruitment gains by UBS, represent a strong showing for a firm that has spent the last several years and hundreds of millions of dollars on luring top teams from competitors. The atmosphere has been changing over the past few years, particularly since Bob McCann was named chief executive of the UBS Americas' wealth unit in 2011.

“We set out at the end of last year to take a look at how our strategy ties in to our story of what's happened at the firm at least at the Americas over these last four or five years since Bob McCann and [Robert] Mulholland and team came in,” said Paul Santucci, head of national sales at UBS Wealth Management Americas. “What we're trying to do from a recruiting perspective is recruit the best financial advisers on the street.”

As a result, UBS has been homing in on established adviser teams who do financial planning for ultrawealthy clients, Mr. Santucci said. According to IN data, the firm was able to lure in teams with an average of $858 million in assets, significantly above the second best wirehouse, Wells Fargo, which averaged $248 million per team. UBS reported only 20 moves, but many of those ranked in the top moves of 2013, including a $3.1 billion team from Merrill Lynch in October and a $4.8 billion team earlier in the year.

The firm has been backing up that promise with a significant financial investment, regularly re-investing roughly 10% of its revenue in compensation packages related to adviser recruitment.

In 2012, the firm brought in a total of $6.1 billion in revenue and spent $634 million on recruiting advisers, up from $536 million the previous year, according to quarterly and annual data reported by the firm. As of the third quarter of 2013, the firm had spent $517 million on adviser recruitment and is on track to surpass 2012 numbers. The firm has yet to publicly disclose fourth-quarter data.

“They're pushing quite hard on the recruiting side,” Mr. Pirker said. “They're paying top dollar for it.”

Mr. Santucci said that the firm has a pool of money that it sets aside to utilize for recruiting, but there is no set goal for how much to spend.

Rick Rummage, a career counselor with the Rummage Group who has worked with UBS in the past, said that he has seen UBS offer deals significantly higher than 300% of trailing-12 production in order to outbid competitors for top teams.

“If they're in a competitive situation and a team is big enough, they will find a way to get you to come there,” Mr. Rummage said.

Adviser movement by quarter, 2010-2013.
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Adviser movement by quarter, 2010-2013. (Source: InvestmentNews Advisers on the Move Database)

UBS had increased its adviser head count from 6,796 at the end of 2010 to 7,137 at the end of the third quarter last year, according to public filings.

That growth is despite the firm reporting near even outflows of advisers, according to the IN database. The firm lost 12 advisers for the 11 it gained in the fourth quarter. The firm overall lost 14 big name advisers for the year, but was still ahead in terms of asset gains, the data show.

“Certainly the other firms are pulling as well,” Mr. Pirker said. “If you're net positive, that's good.”

Part of the allure for UBS has been the pull of Bob McCann, said Craig Chiate, one of the four-man team that joined UBS in October from Merrill Lynch with $3.1 billion in assets under management.

“The leadership within the organization was a major draw,” Mr. Chiate said. “We worked with these folks when we were at Merrill Lynch and we had a lot of respect for them.”

Mr. McCann, who left Merrill Lynch in 2009, has been a strong selling point, and has helped the wealth management side boost its head count to overcome some of the negative news coming from UBS's global operation, says career consultant Ron Edde of Millennium Career Advisers.

In 2013 alone, the firm faced a number of charges, including a $1.5 billion over Libor charges, an $885 million settlement over mortgage-backed bonds, and regulator tie-ups over declines in the Puerto Rican municipal bond market.

“McCann has gotten pretty good reviews,” Mr. Edde said. “The brand might have had a little bit of tarnish on it, but it's coming off pretty fast.”


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