UBS Americas Took In $4 Billion In New Money, But Advisor Pay Stalls

Wednesday, April 27, 2011 05:46
UBS Americas Took In $4 Billion In New Money, But Advisor Pay Stalls

Tags: compensation | profitability

UBS is touting its Wealth Management Americas unit for doing a lot of heavy lifting in turning its results around. But its advisors have yet to reap richer rewards.

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The Swiss bank's U.S.-centered brokerage operation took in $4.1 billion in new client money last quarter and swung from a slight loss to a $127 million profit.


If that performance continues, the unit's roughly 6,800 advisors may see much better bonuses at the end of the year.


But until then, advisor compensation has been stuck in a bit of a rut.


Wealth Management Americas reported 6,867 advisors this time last year and paid them the equivalent of 510 million Swiss francs -- $583 million, or about $85,000 apiece on average.


In the recent quarter, the 6,811 advisors of record brought in 507 million Swiss francs, or $580 million. Even though the typical UBS advisor was managing an extra $600,000 in client funds, he or she only earned a grid payout of maybe $200 more last quarter on that extra AUM.


What's going on? All UBS says is "financial advisor compensation decreased 2%, but rose 2% in U.S. dollar terms due to higher revenue production," which seems to boil down to a smaller advisor pool making the firm more money, even though in the aggregate they got paid less.


For some reason, Wealth Management Americas is still only generating 78 basis points of revenue on client assets -- $7,800 per $1 million.


That's not horrible, but it lags the 95 basis points UBS is generating from its global wealth management operation or the 118 bp it can squeeze out of its Swiss customers. 


And while the firm doesn't break out its overseas compensation with the detail it lavishes on the U.S. unit, it seems that those advisors are managing much bigger books.


On average, the non-U.S. advisors are running $258 million apiece in client assets, versus $125 million on the Americas side.


Recruiting costs are down.


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