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Practice Management > Compensation and Fees

UBS Reps to See Bigger Wealth Bonuses

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UBS (UBS) has joined Bank of America-Merrill Lynch (BAC)and Morgan Stanley (MS) in tweaking its payout plans for 2015, earning it praise from compensation experts.

The Swiss firm, which has about 7,000 advisors in the Americas, aims to further boost results that recently have put it ahead of rivals. Yearly revenue per advisor stood at $1.079 million in third-quarter 2014, up 1% from $1.068 million in second-quarter 2014 and up 9% from $994,000 in 3Q’13. 

“There are no changes to the standard production grid. It remains competitive and is in line with our focus on quality advisors,” the company said in a memo late last week. The standard production bonuses range from 28% to 45% of fees and commissions.

Reps bringing in up to $249,000 of production have payouts of 28%-30%; those with $250,000 to $624,999 get 33%-39%, and FAs producing $625,000 and more receive 41%-45%.

The firm says its wealth-management award has been “significantly enhanced” to encourage advisors to grow their practice. Wealth-management production will include fees tied to advisory services, insurance, lending and planning in 2015, with bonuses of up to 6% of production.

Those advisors who have fees and commissions tied to these products and services that represent between 5% and 24.99% of their total production will get an extra bonus of 0.50%-1% of their wealth-management sales.

For UBS reps who make between 25% and 49.99% of their total production in wealth-management products and services, the wealth-management bonus will range from 1.5%-3.5% of this production. Advisors with wealth-management sales that represent 50% or more of their total production will get a wealth-management bonus worth 4%-6% of these fees & commissions.

“The 6% level is the most I have seen from any major firm, in terms of what is being paid on an ongoing basis for the most-successful advisors,” said compensation consultant Andy Tasnady of Tasnady Associates in Port Washington, New York, in an interview. “This is a bonus that will be paid not just on growth [over last year] but on the overall business.”

UBS’ enhancement could help its advisors continue to grow lending, for instance, which is an area that many firms are promoting, the compensation expert adds.

“Morgan Stanley has a growth-in-lending bonus, for instance, but it is not paid on ongoing revenue; it’s based on growth over last year’s levels,” he explained. “For UBS advisors with a heavy fee-based practice, this is really a valuable compensation element.”

For instance, an advisor producing $1 million in yearly fees and commissions who gets $500,000 of his or her production from wealth-management sales could receive a 6% wealth-management bonus of $30,000.

Other Awards

Net new asset awards have a lower threshold in 2015 with advisors needing $1 million (vs. $5 million in 2014) in net new assets to quality. But to get this award, FAs also have to bring in a new client relationship of $1 million or higher or $10 million in total net new assets.  

UBS says that credit lines and mortgages do count as part of the net new asset awards, which are based on total production and determined as follows:

  • FAs with net new assets of $1 million to $2.99 million will get awards of 0.5% of production;
  • FAs with net new assets of $3 million to $7.99 million will get awards of 1% of production;
  • FAs with net new assets of $8 million to $19.99 million will get awards of 2% of production; and
  • FAs with net new assets of $20 million and up will get awards of 3% of production.

These awards are capped at $125,000 per advisor.

“For some advisors, it could add up,” said Tasnady. A $1 million producer at UBS who brings in net new assets of $20 million, for example, could earn $30,000.

Rival firms make it harder for their reps to earn such bonuses on net new assets. Some give about 5 or 10 basis points on the assets – rather than giving a percentage of production. “It’s a relatively attractive award ,” he said. “Advisors like to convert compensation plans into a percentage of production, which the plan at UBS does.”

Plus, Tasnady points out, other major firms may have a $5 million hurdle vs. the $1 million threshold at UBS. “Thus UBS plan does try to say, ‘We’ll do something for advisors who get $1 million,’ and that could encourage some reps to bring in new assets,” he said.

In addition, UBS says top-producing reps will have 70% of their Partner Plus bonus shifted into deferred cash, up from 50% in 2014, and into restricted equity. “A benefit of this structure is the upfront 6-year note,” the firm stated.


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