As UBS CEO Sergio Ermotti says his firm will "narrow the gap" with other wirehouses, its wealth management unit is rolling out pay policies aimed squarely at keeping current advisors happy and in their seats.
UBS has struggled with advisor departures since adopting compensation policies in late 2024 mainly designed to prod low revenue producers to generate a bit more income and improve its wealth management unit's profit margin. The 2027 pay adjustments it announced Wednesday mark the second year in a row it has tried to soften some of those earlier changes.
In general, the new policies strengthen some of the awards advisors receive for doing things like bringing in net new money, obtaining strong returns on clients' invested assets and securing new clients. In a divergence from the last two years, UBS is making no changes to its compensation grid determining how much advisors get to take home when they generate certain amounts of revenue for the firm.
Lisa Golia, head of the field for UBS' Global Wealth Management unit, wrote in a memo that the new policies are meant to make advisors' compensation more predictable and avoid "significant or unexpected changes."
"With that in mind, we've kept changes to a minimum and prioritized stability and consistency," Golia wrote. "The enhancements are designed to recognize growth, performance, and support career progression, while maintaining a compensation grid that remains among the most competitive in the industry."
As UBS holds course, Morgan Stanley stretches its grid
UBS's 2027 pay policies mark a strong contrast from those announced last week by Morgan Stanley, the only other wirehouse so far to be out so far with its compensation plan for next year. Morgan Stanley said last week that it will increase the revenue thresholds advisors must cross to move from a lower payout rate to a higher one by 10% across the board.
Firms often adjust their compensation policies to combat a phenomenon known as "grid creep." That's the tendency for appreciating invested assets to give advisors more take-home pay without their having any need to bring in new clients or money to manage.
Andrew Tasnady, a compensation consultant and the founder of Tasnady & Associates, said UBS' pay policy for 2027 is distinct because it doesn't offer advisors the mixture of "good news, bad news" that most firms have in their annual compensation announcements.
"It sounds like it's just all pluses," Tasnady said. "It's not earth shaking. But, you know, overall, I think it's a positive set of changes for UBS. One, they didn't make any negative changes on the grid. And two, they made a few you know tweaks in a few of their different areas."
UBS still fighting advisor defections
UBS is the only wirehouse that still provides quarterly totals for its advisor headcount. And that number has fallen steadily over the past two years.
In July, UBS reported the headcount for its Americas wealth unit — which includes the U.S., Canada and Latin America — was down by 80 advisors from the previous quarter to 5,644. Still, the firm's U.S. wealth management division has made progress toward another long-held goal: improving its profit margin. The unit's cost-to-income ratio fell to 84.1% in the second quarter from the previous three months' 87.4%.
Speaking on Tuesday at the Bank of America 31st Annual Financials CEO Conference in London, CEO Ermotti said the improvements result from the wealth management unit now "executing on four or five levers."
Among other recent changes, UBS in March won approval for a U.S. banking charter, making it easier for advisors to offer banking products like checking and savings and accounts and payment services.
Ermotti also said Tuesday that UBS has "a healthy recruiting pipeline" for advisors.
"We try to really balance staying competitive in the recruiting space without doing deals that are quite value disruptive," he said. "So, I would say confidently that we will continue the trajectory to narrow the gap with our peers."
Changes to UBS' pay plan in 2027
Among other things, UBS' new pay policies for next year will:
- Offer strengthened growth awards. Advisors, for instance, will be able to claim bonuses for bringing in new clients in the last 24 months. That "look back" period is being increased from 15 months.
- No longer count money held in checking and savings accounts toward the rewards advisors can secure for getting good returns on client assets. Since assets held in these types of accounts tend to not appreciate quickly, they were perceived as a drag on advisors' ability to obtain return-on-asset awards.
- Provide advisors with new incentives for getting clients to open UBS bank preferred checking and savings accounts and simplify the compensation they receive for arranging mortgage loans
- Provide more opportunities for internal recognition. UBS will increase the number of advisors who can participate in its Directors Council and introduce a new Pacesetter Recognition Council.
