UBS Nabs Chicago Bank Broker with About $1 Mln of Revenue

UBS Wealth Management-USA has hired a million-dollar producer from HSBC Securities, continuing a calculated strategy to fill its desks with bank-trained advisers who are generally less expensive to recruit than traditional brokers.

Brent A. Penrose, a senior relationship manager at HSBC’s private bank in the Chicago suburb of Barrington, joined UBS on July 31, according to his BrokerCheck history.

An advisor for 12 years at private banking units that generally pay salaries and a bonus rather than an eat-what-you-kill revenue-based payout, Penrose generated about $1 million in production on $300 million in client assets, according to a person familiar with his book.

UBS has said that it is primarily interested in hiring brokers who produce $10 million, and insiders said it is not terribly concerned about replacing lower-earning brokers who leave with million-dollar private banking advisors from commercial banks. But it does have seats to fill due to the net departure of some 265 brokers in the past 12 months, according to insiders.

Penrose moved to UBS on the same day as Jennifer Lucovich, a $1.1 million producer in Arizona who joined from BMO Harris Bank.

Filling desks with bank-trained advisers is a two-sided proposition, said Randall Grossblatt, a former UBS regional manager who is now a recruiter at Kinetic Strategic Partners.

They are often easier and faster to hire because they are not on the radar of many traditional branch managers and many are tempted by the prospect of a grid-based payout. The downside: Private bank clients tend to be less loyal to brokers and more tied to the bank, where they likely have credit lines and loans in addition to investment portfolios.

“It is problematic as to whether they can bring over as many of their [customer] assets,” Grossblatt said, comparing them to the transfer rate of wirehouse-to-wirehouse candidates.

UBS today has fewer than 6,000 U.S. brokers, less than half the size of its wirehouse competitors Morgan Stanley, Merrill Lynch and Wells Fargo Advisors.

The U.S. unit of the Swiss banking giant has been on a recruiting diet since 2016, and some say the policy is paying rewards.

It is working down more than $3 billion of forgivable recruiting loans that former Americas wealth boss Bob McCann accrued after his arrival in 2009, and as that occurs it has become more profitable.

“They will keep getting smaller,” said a senior executive who left UBS Wealth Americas this year.  “They are recruiting and hiring less, but productivity is skyrocketing.”

In this year’s first quarter, UBS Wealth Management Americas reported record profit as the smaller advisor force generated more new assets than their customers withdrew, while expenses fell. (Net new assets continued positive in the second quarter, but profit fell because of the lower value of assets in advisory accounts.)

Forgivable recruitment loans as of June 30 were down 12% from a year earlier to $1.93 billion.

UBS Wealth Management-Americas had 6,410 brokers at the end of the second quarter, including those in Latin America and Canada—a net departure of 268 over the previous 12 months and of 86 during the April-June period. Within the U.S., the brokerage force is about 5,970, according to advisers.

Penrose, who first registered as a sales rep in 2008, at LaSalle (Bank) Financial Services, did not return a call for comment on the move. He also worked at JPMorgan Chase and Wells Fargo’s private bank before joining HSBC two years ago, according to BrokerCheck.