16 June 2019

UBS Sweetens Advisers’ Retirement Payouts

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UBS AG is offering a bigger payout to soon-to-retire brokers in an effort to keep client money in-house. On Wednesday, the Swiss bank’s U.S. wealth-management unit started rolling out a program that offers its nearly 7,000 brokers a sweetened deal where those looking to retire can receive a payout more than double their annual production if they choose to hand their clients over to another UBS adviser at the end of their career.

The initiative, known as the Aspiring Legacy Financial Adviser program, or ALFA, comes at a time when the major brokerages are grappling with more advisers who are choosing to break away from the established firms to form their own shops or join one of the existing independent broker-dealers or hybrid firms, taking the clients they managed with them.

Data-research firm Cerulli Associates said head count at the big brokerages fell nearly 3% over the last five years through 2013, while the independent channel has grown during that time span. Cerulli expects that trend to continue for the next five years.

Jason Chandler, head of UBS’s wealth-management adviser group with a focus on the Eastern U.S., said UBS sought to “create a benefit for people who choose to retire at UBS” with its retiring adviser program changes, while also putting a greater emphasis on high- and ultra-high-net-worth assets.

UBS, like rivals such as Morgan Stanley, have made it no secret that they are looking to attract more ultrawealthy clients with as much as $10 million of assets to invest. To that end, firms have made recruitment of advisers that specialize in those clients a priority.

UBS’s new retirement offer is available to any of its U.S. advisers with at least five years of experience at the firm, and it offers to pay up to 230% of an adviser’s production, said David Larado, head of net new money strategy at the brokerage. The retiring adviser’s total payout is influenced by several factors, including his or her total production, length of time on a team and how much in net new assets he or she attracted in previous years.

Advisers who enter the program have the option of staying involved with their clients for the first two years to smooth the transition process. To encourage advisers to participate, UBS will also factor into the payout any production growth associated with their ultrawealthy accounts, as well as any net new money attracted.

Previously, UBS had a program in place since 2009 that offered qualified advisers up to 180% of their annual production upon retirement. But advisers needed to have worked at UBS for 10 years to qualify. The other major brokerages have also given more attention to soon-to-retire advisers in order to deter them from leaving and taking the clients they managed with them.

Click here to access the full article on The Wall Street Journal. 

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