UBS continues to cut loans to recruits, while increasing compensation to brokers

The wirehouse reduced recruitment loans 20% and increased bonus loans 68% in the first quarter

Apr 23, 2018 @ 2:37 pm

By Bruce Kelly

UBS is recruiting less and paying its brokers more.

The bank released first quarter earnings Monday, and in a news release reported that recruitment loans to financial advisers had declined 20% in the quarter when compared with the same period a year earlier. Meanwhile, its "other loans" — a form of deferred compensation — to existing advisers increased 68% in the first quarter.

Those results are in line with a change in strategy announced almost two years ago. That's when UBS Wealth Management Americas said it would shift strategies and focus efforts on retention of top-producing advisers while cutting back on recruitment.

In June 2016, the company said it would focus on a new operating model meant to drive organic growth "through an increased focus on adviser retention," according to Tom Naratil, the firm's president at the time and now co-president.

On February 1, UBS created a unified Wealth Management and Wealth Management Americas business division, called Global Wealth Management. This was the first quarter the company had reported under its new structure, making a picture of its operations to start 2018 less than clear.

For example, UBS Wealth Management Americas reported 6,822 brokers and advisers at the end of December. At end of March, the new Global Wealth Management Group reported 6,956 advisers in the Americas, for an apparent increase in the net number of advisers at the firm. However, due to the new group's combined reporting, it's not possible to tell whether such a comparison is accurate.

UBS has a longstanding goal of having 5,000 to 7,000 brokers and financial advisers in the United States.

Company spokeswoman Maya Dillon noted that, for the quarter, pretax profit at the Wealth Management Americas unit increased 19% to $400 million and advisers productivity increased 13% year over year.

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