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UBS in U.S.: Less Advisors, Improving Money Flows

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UBS wealth-management operations in the Americas reported declining client assets and financial advisors during the second quarter, but positive inflows when interest and dividends are included.

The brokerage unit, which does business in the United States and Canada, is led by former Merrill Lynch executive Bob McCann

Net new money outflows were 2.6 billion Swiss francs (about $2.5 billion), excluding interest and dividends, compared with 7.2 billion Swiss francs in the first quarter and 5.8 billion Swiss francs in the year-ago quarter.

Last week, Morgan Stanley said the second-quarter outflows of its 18,000-plus advisors were $5.5 billion, including interest and dividends.

UBS said it would have had net inflows of 1.7 billion Swiss francs – about $1.6 billion – this quarter for its U.S. advisors and net inflows of 2.0 billion Swiss francs – about $1.9 billion – for advisors in both the U.S. and Canada.

“This marks the first quarter of net inflows on this basis since first quarter 2009,” the company said in its full earnings report.

The number of advisors in the unit stands at 6,760 – a 2% decline from the first quarter and a 15% decline from last year.

The company, though, insists it is battling attrition and improving client flows.

“Financial advisor retention initiatives resulted in lower outflows related to financial advisor attrition, while net new money inflows from financial advisors employed with UBS for more than one year declined slightly from the prior quarter, but remained positive for the second consecutive quarter,” UBS explained in a report.

Client assets are about 742 billion Swiss francs, down 3% from the first quarter but up 1% from a year earlier.

The unit also posted a pre-tax loss of 67 million francs related to charges of 146 million francs related to layoffs and the closure of branches. Without these charges, UBS said this business would have posted a pre-tax profit of 79 million francs, more than double the 36 million francs it earned in the first quarter.

The bank’s average revenue per adviser was $793,000, up one third from the same quarter last year, according to Reuters.

This puts UBS behind the $853,000 per adviser at Merrill Lynch but exceeds the production of Morgan Stanley advisors, which stands at $679,000.

Each UBS Americas advisor has an average of $95 million in client assets, compared to $83 million at Morgan Stanley.

UBS AG reported an overall second-quarter a profit of 2 billion Swiss francs ($1.9 billion), above analysts’ forecasts of 1.34 billion francs, on July 27, when UBS Group CEO Oswald Gruebel told Reuters that he remains committed to the U.S. business.

Last week, UBS AG nominated Joseph Yam, founder and former head of the Hong Kong Monetary Authority, for election to the board of directors at the bank’s next annual meeting on April 28, 2011.


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