UBS Wealth Management Americas continued to hemorrhage new client assets in the third quarter at almost twice the clip from the previous quarter. Advisers also continued to walk out the door to the point that the company may not be able gain market share from competitors.
The division saw outflows of client assets of $9.6 billion for the quarter, an increase from last quarter’s outflows of $5.3 billion. The unit also lost a net 653 financial advisers over the quarter, including 368 advisers who were in the branches sold to Stifel Nicolaus. The division now has a total of 7,286 advisers.
However, on the upside, UBS Wealth Management Americas also returned to profitability this quarter, posting a $107 million pre-tax profit versus a loss of $214 million last quarter.
“While earlier this year, the UBS Wealth Management Americas arm had reported inflows [due to aggressive hiring], it is now also reporting outflows scarily close to the $10 billion mark, almost double from the second quarter,” said Alois Pirker, research director of Aite Group. “These numbers clearly indicate that the firm is not in the position to gain market share from its wirehouse rivals.”
This is the first quarterly announcement on the watch of Robert J. McCann, the new chief executive of UBS Wealth Management Americas, although, in fairness, McCann, the former head of Merrill Lynch’s brokerage force, only took the UBS job last week, on Oct. 27. McCann now oversees the firm’s domestic wealth management business in the U.S. and Canada and for all international business booked in the U.S.
Pirker added that McCann has “his work cut out for him” balancing the need to remain profitable with the desire to offer big sign-on bonuses to attract brokers and their assets.
Overall, UBS reported a third quarter loss of $547 million. The firm said this was primarily due to an accounting charge of $2.08 billion as costs for its debt rose.