UBS advisor pay remains unchanged for 2019

UBS will again largely refrain from tampering with financial advisor pay under next year’s compensation plan, the wirehouse told advisors on Wednesday.

The move puts UBS in line with practices at regional brokerages, many of which do not make annual tweaks to compensation. The wirehouses, by contrast, have traditionally made annual changes that have included adding or removing incentive bonuses, cutting deferred compensation and altering the grid used to calculate payouts.

“I think it gives [the advisor] a sense of stability. That’s smart,” says Michael King, a New York-based recruiter.

Andy Tasnady, a compensation consultant, says advisors can be suspicious when they hear that there are comp changes because they think it’ll be negative for them. “It’s usually good news when a firm can say there are no changes in the comp plan,” he says.

There are two philosophies regarding changes to pay, he adds. The first is to make small, annual changes that over time lead to shifts in overall strategy. The other is to make more meaningful changes only every few years.

“The caveat, of course, is that the plan is working well for the advisors and the firm’s strategy. If it isn’t, then it needs to be addressed,” Tasnady says.

When UBS introduced its current compensation plan in 2016, the company dramatically reduced its complexity in a bid to improve employee satisfaction at the company. The brochure explaining the plan shrunk from 34 pages to eight.

Stefan Wermuth/Bloomberg

The comp plan features a top payout rate of 50% and two bonuses advisors can earn for length of service and net new households. However, UBS said it would remove a $50 million household cap for the net new business award and provide greater flexibility in how teams could share an award.

The maximum an advisor can earn under the net new households bonus is still $250,000.

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The Swiss bank has not tweaked advisor pay since then aside from what it describes as necessary changes to due to regulatory requirements.

Last month, UBS said it would keep in place a method for calculating advisor pay as it relates to retirement advice. The calculations were introduced in response to the Department of Labor’s now defunct fiduciary rule. The company said it would wait to see how the SEC proceeds with its proposed Regulation Best Interest, a rule updating broker standards of conduct, before making changes.

And in a policy shift, the wirehouse did introduce in February a one-year non-solicitation clause for the deferred compensation associated with its strategic growth awards. That clause did not affect payouts, however.

King called it a bad policy for brokers. “It locks people up,” he says.

UBS is not the first wirehouse to unveil its compensation plan this year. Morgan Stanley went first, and much earlier than is traditional, in unveiling a 2019 comp plan that gives advisors new incentives to grow their business. In particular, Morgan Stanley added incentives related to financial planning, net acquired assets and lending growth.

Merrill Lynch and Wells Fargo have not made announcements regarding their financial advisor compensation plans for next year.

InvestmentNews first reported news of UBS's lack of comp changes.