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Practice Management > Compensation and Fees

UBS Leaves Comp Plan Unchanged for 2021

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Photo of UBS building(Photo: Bloomberg)

UBS has decided not to adjust the compensation plan for its financial advisors in 2021 and will maintain the current payout plan it’s used in 2020.

The news was announced by Jason Chandler, head of Wealth Management USA, in a recent memo that ThinkAdvisor viewed Monday. In the memo, he explained: “Each year we review our plan within the context of our approach to reward loyalty, growth and productivity. At this time, there are no changes from the 2020 to the 2021 FA Compensation Plan.”

“That’s something that will be welcomed by their advisors,” according to executive recruiter Mark Elzweig. “Yearly payout chiseling is bad for morale and can cause defections.”

The wirehouse likely wants to avoid any defections. Its advisor headcount in the Americas  was 6,353 advisors as of Sept. 30. This figure was down 274 from 6,627 in Q3 2019 and also down 57 from 6,410 in Q2’20.

On Monday, for instance, a group of four veteran advisors working $4.8 billion left UBS to start RIA NewEdge Wealth. The team, which used to do business as Turnstone Wealth Management, broke away through a joint venture with EdgeCo Holdings, a technology and services provider.

Separately, reports have been circulating that State Street is in talk with UBS to merge the two firms’ asset management businesses.

Other Wirehouses

In May, UBS joined other wirehouses and pushed back the start of changes to grid payouts due to the pandemic.

Last week, UBS rival Wells Fargo Advisors said it raised by $1,000 the monthly revenue hurdle that its brokers must reach before they receive a higher payout rate. This move marked the first shift in the WFA hurdle since 2014.

Also in 2021, WFA Private Client Group brokers, who number about 10,000, will see their payout level rise from a base of 22% to 50% if they meet the new monthly hurdle of total fees and commissions of $12,500-$14,250, which is up from $11,500-$13,250 this year. (Exact payouts depend on the achievement of key production and client-centric goals, according to the Wells Fargo.)

Merrill Lynch recently said it has eliminated pay to advisors on all client household accounts under $250,000; it did though leave its core incentive compensation grid intact for 2021.

Performance hurdles for Merrill’s growth grid, meanwhile, will remain at the same levels introduced in mid-2020. The wirehouse slightly tweaked its team grid program, which factors in an entire advisor team’s book.

It also made a slight tweak to compensation on cash accounts, moving from 4.0 basis points to 2.0 basis points on the credits brokers get on cash deposits in bank and brokerage accounts, money market funds, bank CDs and brokered CDs.

Rival Morgan Stanley hasn’t announced its 2021 comp plan yet. It did say in March that it was delaying an important change to its compensation plans until October. The shift, involving a jump in the levels of yearly fees and commissions under $5 million used as thresholds in the incentive comp grid, had been set to start April 1.

See: 13 Best-Worst Broker-Dealers: Q3 Earnings, 2020


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