UBS Orders Fee Waivers, Loan Discounts on Reassigned Accounts
UBS Wealth Management USA has formalized its strategy for retaining clients of brokers who join competitors, telling advisors assigned the accounts to embrace discounts and other inducements that will be offered across the board to the clients.
Brokerage firms have long offered deals to keep customers from following their brokers to new firms, but UBS and others usually leave such decisions to local management on an account-by-account basis. The memo indicates that the offers have been institutionalized, said two former UBS managers, and comes as UBS has experienced a steady outflow of advisors to other firms.
“It’s kind of a big deal,” said one of the former managers. “Retention deals to keep clients have always been in the past negotiated by the market head.”
Brokers, of course, have always been eager to get reassigned accounts, but the memo implies that some may resent the new policy and brings up “the unlikely event” that some will reject the reassignment.
“With this new offer of fee reductions, Advisors may receive less compensation in the short-term,” the memo to managers says. “In your discussions with Advisors, please indicate that having a long-term relationship strategy is the right approach.”
A spokesman for UBS declined to comment on the policy or the reasons for rolling it out now.
UBS does not break out the number of its U.S. advisors, but brokers citing their internal rankings said the count has dropped to less than 6,000 from more than 8,000 prior to its decision to curb its recruiting budget three years ago.
The Swiss bank’s most recent earnings report said 6,353 financial advisors work in the Americas, a region that also includes Canada and Latin America. The total was down by 274 advisors from 12 months earlier.
Merrill Lynch, which has around 14,000 brokers in its core wealth management unit, has also enhanced client discount, waiving some fees for as long as two years, to counter a stream of advisor departures.
The UBS memo to managers said the fee waivers and rate reductions will be offered to all clients except for those reassigned to its Wealth Advisory Center, the firm’s repository for small accounts that get less personal direction from its brokers. It also said that in cases where only some members of a brokerage team leave for a competitor, clients will be reassigned to the remaining advisors on the team.
—Jed Horowitz contributed to this story.