UBS' Americas wealth management arm saw an $8.6 billion exodus of client assets in the third quarter, a stark reversal from last year's inflows. Outflows at the firm have ramped up in recent months as cost-cutting and compensation overhauls continue to spur advisor departures.
Advisor headcount at the firm recovered slightly quarter over quarter, but was down 3.5% compared to the same period last year, to 5,779 advisors, the Swiss firm reported Wednesday.
UBS Chief Financial Officer Todd Tuckner told analysts in February that changes to the firm's
That model has apparently cost the firm billions in client assets as major teams continue to depart.
In early October, Janney Montgomery Scott pulled Belice Leininger Private Wealth, a two-advisor practice that had formerly managed
Such losses have weighed heavily on UBS' Americas wealth management unit, which includes the U.S., Canada and Latin America and reported $8.6 billion in client asset outflows during the third quarter, a sharp reversal from $8 billion in inflows in the same period last year.
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"It's the size and quality of the departing teams that is even more noteworthy," according to Diamond Consultants. "By our count 16 teams with over $500 [million] in AUM and 8 with over $1B in AUM left the firm in the first half of the year."
In an attempt to address the flood of departures, UBS unveiled a
On Wednesday's earnings call, Tuckner said that the firm's compensation changes were helping to improve other parts of the business.
"Importantly, the strategic reset is already driving improvements in the region's pretax margins and operating leverage, thereby unlocking investment capacity to further enhance the platform's capabilities and solutions to help advisors grow their books and better serve clients," Tuckner said. "Looking ahead, we expect turnover to moderate, supported by a healthy recruiting pipeline and a record number of advisors choosing to stay and ultimately retire at UBS."
UBS has also enrolled 161 advisors in its Aspiring Legacy Financial Advisor Program, or ALFA, which helps retiring advisors hand their practices down to colleagues.
Despite the outflows, UBS Americas' pretax profit rose 26% year over year to $416 million, supported by a 9% revenue increase to $3.1 billion.
Costs fell slightly as a percentage of revenue, from 88.1% to 86.2%, and assets under management climbed 9% to nearly $2.3 trillion, buoyed by rising equity markets.
UBS bets big on a national bank charter
UBS executives noted the importance of the company's recently filed
The firm said it expects the application to be approved in 2026. Once granted, the charter will allow UBS to offer more competitive and comprehensive banking solutions to its U.S. clients, a "pivotal milestone in our multiyear strategy to improve the breadth and depth of our client offering, and setting the stage for long-term value creation," said UBS CEO Sergio Ermotti.
Competitors like Citi have reported
"If we want our clients, the great majority of whom are doing their banking with other banks, our peers largely in the U.S., and we want to have those clients start to bank with us, that's going to take time," Tuckner said. "But we can't do it until we have the charter license approved."
