UBS in January admitted that changes made last year to the compensation plan for its roughly 6,000 financial advisors were motivating some advisors in the United States to head for the exit.
And that could turn even uglier this year for UBS, according to a report by one recruiting firm, with the global banking and wealth management firm potentially losing as many as 10% - or 600 – financial advisors this year in the United States.
“UBS will be the biggest loser of advisor share in 2025,” according to the report, which was published this week by Diamond Consultants and is titled “Financial Advisor Transition Report.”
“Recent compensation plan changes and subsequent comments from management about future cost-cuts were simply a step too far for many UBS advisors,” according to the report. “We predict this will be the proverbial straw that breaks the camel’s back for many, and attrition from UBS may well exceed 10% of all U.S. advisors.”
“It remains to be seen if the firm will walk back some of the changes, especially cuts to 12b-1 fees,” according to the report.
Charges to financial advisors’ clients labeled “12b-1 fees” are kicked off by mutual funds each year and go towards paying for marketing, distribution and other expenses, often including a portion that goes to financial advisors and may be part of an advisor’s annual revenue stream.
Diamond Consultants is a third-party industry recruiter and works with other broker-dealers that may be seeking to hire advisors currently working at UBS.
A UBS spokesperson did not return a call Thursday to comment.
Toward the end of last year, UBS said it was redrawing its pay plan for advisors and in 2025 would cut a bonus for teams that was unique in the industry, according to industry sources. It also cut rates on its pay grid that will squeeze advisors who are the lower producers of revenue, a long-running tactic by large firms to boost margins.
The problem UBS wealth management in the US is facing is its profitability, and these changes are looking to boost the firm’s bottom line, even as some financial advisors search for greener pastures.
UBS wealth management in the Americas is targeting a 15-percent profit margin by 2027, up from about 10 percent right now. UBS’s much larger direct competitors, Morgan Stanley and Bank of America, have wealth management businesses that with profit margins that hover slightly below 30 percent.
“UBS’ 2025 compensation plan change was not received well by its population of advisors,” said Lou Diamond, president of Diamond Consultants, in an interview this week. “For the first time in memory, just about every advisor regardless of size, mix of business, growth, or longevity was harmed.”
“While compensation changes alone aren’t enough to justify a transition, it’s proven to be the straw that breaks the camel’s back for many large teams, especially combined with executive comments around cost cutting,” he added.
Meanwhile, financial advisor movement throughout the industry in 2024 was relatively flat when compared to a year earlier, according to the report, with a total of 9,615 experienced advisors changing firms last year.
That’s compared to 2023, when 9,674 advisors changed firms.
A score is generated to show coverage needs across life insurance, long-term care coverage, retirement income protection, and annuities.
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