February 5, 2025
Louis Diamond Quoted
By Glen Koch, FAIQ
The wirehouse’s CFO said on Tuesday that the firm expects some advisors to leave in response to recent compensation changes and that the firm has adjusted its 2025 financial targets accordingly.
UBS’ chief financial officer says the firm expects to lose U.S.-based financial advisors as the wirehouse shifts its compensation structure in hopes of spurring profits.
“In the U.S., our efforts to align financial advisor incentives with our strategic priorities may result in a short-term increase in FA attrition, creating an additional headwind for net new assets in the coming months,” Chief Financial Officer Todd Tuckner said Tuesday during the bank’s quarterly earnings call.
Tuckner added that the firm has adjusted its 2025 pre-tax margin forecast to reflect the expected attrition.
UBS executives in recent months have stressed that boosting profitability is the top priority for the Swiss bank’s U.S. wealth business. For the quarter that ended Dec. 31, the unit’s cost-to-income ratio was 92.4%, which was 4.9% worse than in the prior quarter and translates to a profit margin well short of 10%, whereas wirehouse rival Morgan Stanley posted a profit margin of 27% in its wealth management unit for the most recent quarter.
In UBS’ 2025 advisor compensation plan, revealed in November, the wirehouse added and enhanced incentives for advisors who grow their business and who connect clients with banking capabilities, but it also cut compensation for lesser producers and some teamed advisors.
Tuckner said Tuesday that the adjustments were not aimed at reducing compensation “but to increase it, as long as it’s being done in ways that are very aligned with our strategy.”
UBS’ advisors are not only being asked to grow their business and that of the greater bank but also to expand the client segment they serve. As part of its plan to improve profitability in the wealth unit, the firm in December said it would begin to venture outside of its familiar ultra-high-net-worth neighborhood to attract clients in the high-net-worth and core-affluent segments.
The change in focus widens the recruiting net, “but it hurts because some of the exclusivity and cachet wear off and they now have to compete with so many more firms,” Louis Diamond, president of Morristown, New Jersey–based recruiting firm Diamond Consultants, told FA-IQ.
