In January, UBS excised its longstanding award that paid advisors bonuses up to 12 percentage points. However, since the removal of the award, UBS's net outflow of advisory assets has increased, according to AdvisorHub. Net new fee-generating assets in the first quarter were down 30 percent to $12 billion from $17.2 billion a year ago.
That said, Andy Tasnady, a compensation consultant, opines that it is difficult to pin down the impact of the strategic objective award on the total decline in new net assets, given that it is one of many factors affecting client flows.
According to recruiters, UBS's 2022 plan created asset-growth challenges in other ways. Several advisors became frustrated with losing the net new assets award and other compensation changes that linked payout more directly with length of service. The compensation changes raised the total payout potential and resulted in pay cuts to some advisors who were on teams or previously benefited from the asset award.
Likewise, other factors, such as advisor transitions, have contributed to the decline in new net assets. For example, recently two groups with a combined $4.6 billion in assets moved to New York, and a $1.4 billion-AUM Denver-based advisor left to open a registered investment advisory firm.
Indeed, other wirehouses, such as Merrill Lynch and Morgan Stanley, have reported that net new assets declined significantly in the second quarter. Both wirehouses are working hard to encourage veteran advisors to focus on client prospecting.
Finally, Sarah Youngwood, UBS's CFO, contributes the decline of new net assets to its ultra-wealthy client base. Ultra-wealthy clients have faced larger tax bills during the second quarter of this year. Youngwood said customers pulled $10 billion for tax payments–primarily from investment accounts–compared to $7 billion a year ago.
Financial Advisor Transitions consults advisors nationwide to explore employment transition options and to preserve and protect their practice in any transition that they make.
