After reporting in February that it was expecting financial advisors to leave the firm after changes to the firm’s compensation plan, UBS on Wednesday reported a 3.8% year-over-year decline in the total number of advisors in its Americas region.
The drop in headcount totals a net decline over the past 12 months of 229 fewer advisors at UBS in the Americas at the end of June, when its advisors headcount totaled 5,773. A year earlier, the firm reported 6,002 advisors employed in the region.
For the quarter, the firm saw a net loss of 111 financial advisors in the region during the three months ending in June compared to the end of March.
And some in the industry say that more UBS financial advisors this year will be heading to the exits.
“This is just the tip of the iceberg,” said Louis Diamond, CEO of Diamond Consultants, a third-party recruiting firms that moves advisors out of wirehouses like UBS to other firms. “These are just the first of the defections stemming from last year’s compensation and pay changes. We’ll see many more.”
Meanwhile, senior management at UBS is prepared for more advisor attrition as the firm works to boost pre-tax margins.
In terms of headcount, the second quarter is typically seasonally more active in terms of financial advisor moves across the street, said chief financial officer Todd Tuckner this morning during a conference call with analysts, per the call's transcript. He said the changes they have introduced means they could see some continued movement across firms and to the independent channel.
Financial advisors are the lifeblood of any wealth management business because they drive revenue and the addition of clients. UBS financial advisors in the United States are on average among the highest producing in the industry in terms of total revenue.
Of course, UBS has financial bankers and financial advisors in Asia, Europe and across the globe, but its wealth management business in the United States has struggled to generate profits on par with its competitors Morgan Stanley and Bank of America.
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 profit margins.
Pre-tax profit in the second quarter for UBS’ wealth management franchise in the region increased $117 million to $364 million, or 48% year-over-year. Profit margins for the region were 12.4%.
Total wealth management revenues in the Americas increased by $168 million, or 6%, to $2.93 billion.
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