UBS adjusted its 2022 pay grid to reward time spent with the wirehouse, revenue and teamwork — but not everyone is happy with the changes.
The new pay structure factors in an advisor’s 12-month production and gives higher payouts to those who have been with the company longer. For example, an advisor who has been at UBS for at least 20 years and produces $10 million annually will receive a 60% payout, Barron’s reported in November.
UBS declined to comment for this story. Jason Chandler, the firm’s head of wealth management USA, told Barron’s in November that the new grid would mean pay raises for more than half of the firm’s around 6,000 advisors. The new grid structure also allows teams to achieve a collective payout rate by adding up their revenues, according to Barron’s.
The new pay grid isn’t rewarding for a number of advisors, however, a UBS advisor in the Mid-Atlantic region, who asked not to be named, told FA-IQ.
On the contrary, “[a] lot of people at UBS are pretty upset about it,” the advisor said. “It’s been misinterpreted as a pay raise.”
Ninety-five percent of the advisors the source has spoken with would rather go back to their old grid, according to the advisor. “I think a lot of people didn’t do the math and got their paycheck and said, ‘What the hell happened?’” the advisor said.
While producing the same amount, the advisor got a cut in payout of more than 3% compared to the payout from the prior UBS pay grid.
Other UBS advisors have voiced their concerns, according to Louis Diamond, president of the recruiting firm Diamond Consultants, who works with the wirehouse’s advisors and helps them find new career options.
“What we have heard from UBS advisors is that, for the most part, advisors are unhappy with the compensation plan changes,” Diamond said. “One negative is that a large swath of advisors who are coming off their best years and growing [their practices] are getting a decrease in pay because their length of service at UBS fell below the band where they get a raise.”
However, Diamond acknowledges that the new pay grid rewards and encourages longevity.
“One positive would be for advisors that have been at UBS for a long time or are committed to stay at UBS for ‘x’ many years,” he said. “It will work for them.”
But Diamond describes the deferred compensation portion, which is said to be 15% of the payout, as tightening “the golden handcuffs.”
The Mid-Atlantic advisor says 50% of the deferred compensation is in UBS stock, with a six-year cliff vest. “The other 50% is in cash, but that’s over seven years,” the advisor said. “You don’t get anything [the] first year, [the] second year [you get] one-sixth, and so on.”
The advisor estimates that, depending on their production and length of service, some advisors could see an initial 5% to 15% pay cut, which is then made up for in deferred compensation.
“That’s given back, kind of double, but over the course of six or seven years,” the advisor said.
FAs who choose to leave UBS before the deferred compensation vests will miss out, according to the advisor.
“Nobody wants to trade off their grid for something that a lot of them will never get,” the advisor said.
The deferred compensation that UBS advisors will lose if they leave the wirehouse before the vesting period also poses recruitment challenges, according to Diamond.
“There are some firms, like wirehouses, that will reimburse advisors for their lost deferred compensation,” Diamond said. “Now it will be more expensive for the firms to do recruiting.”
It could also make it less compelling for a UBS advisor to leave for an independent or regional firm that does not reimburse for deferred compensation, he added.
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