More UBS Brokers Face Penalty Box

Lower-producing UBS advisors have been given six months to boost their production or face the so-called ‘penalty box.’

Currently, advisors with more than eight years in the industry who generate less than $250,000 a year in fees and commissions receive a flat 20% payout. As of June this year, that production threshold will be increased to $300,000 for the 20% flat rate.

"We are encouraging all financial advisors to succeed and grow their business here at UBS. We are implementing these changes now to give advisors who fall below these metrics enough time to increase their numbers," says a UBS spokesperson.

Rich Schwarzkopf, a New York-based recruiter, says such a change may signal the firm’s desire to downsize and focus on the high-end advisors. “They might want to bring it down to 5,000 advisors with everyone doing $750,000,” he says.

When lower producers are forced out, Schwarzkopf adds, firms typically put a lot of effort into retaining their assets. “If a small broker has a $30 million book, that can be distributed among the bigger brokers and they like that,” he says.

This comes as UBS strives to keep its higher producers, recently unveiling a retention package for advisors producing at least $500,000.

UBS isn't alone, other firms are also punishing smaller producers.

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