UBS agreed to pay more than $1.5 billion to authorities in the United States, United Kingdom and Switzerland last Wednesday over LIBOR manipulation and related charges. It also disclosed that the resolution of these regulatory and legal issues should result in a fourth-quarter net loss of up to $2.7 billion.
With wirehouse and other broker-dealers eager to exploit another round of negative UBS news for the benefit of their recruiting efforts, AdvisorOne spoke with experts about how much heat UBS’ 7,000-plus financial advisors in the Americas are taking.
“UBS has had so many issues over the past three or four years,” said Chip Roame, head of the consultancy Tiburon Strategic Advisors, in an interview. “I must believe that it’s a bit exhausting as a frontline advisor.”
Of course, their clients are likely to ask questions and have doubts, Roame shares. “But even when they don’t ask, you must wonder whether it makes clients diversify some assets away or prospects think twice about coming,” he explained.
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Others see the situation even more critically.
“In the short term, this will shut down a lot of the UBS recruiting pipeline,” said executive-search consultant Mark Elzweig. “No one wants to jump from the frying pan directly into the fire.”
As some other observers have noted recently, the LIBOR scandal is not a case of a single “bad apple” rogue trader, Elzweig said. “It calls into question how well the firm itself is run from a compliance and management standpoint.”
Still, “time heals all things on Wall Street,” noted Elzweig. “If UBS continues to offer good packages, they’ll return to being successful recruiters once again.”