Retention coming . . . from UBS

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Feb 3, 2009 10:08 am
 
It just keeps getting better . . .
 
Troubled Swiss banking giant UBS has held preliminary talks with Wachovia Securities about forging a joint venture of the pair's North American wealth-management units, The Post has learned.

Such a venture would combine UBS' wealth-management shop, which has more than 8,000 retail brokers in the US, with Wachovia Securities' 16,000 financial advisers.


Wachovia was acquired late last year by Wells Fargo.


The combination could be similar to a partnership formed between Citigroup's Smith Barney and Morgan Stanley to combine their respective wealth-management operations into a 20,000-strong behemoth.


It's unclear at what stage the discussions are in, or exactly what form a joint venture might take. One source warned a deal might never materialize.


A UBS spokeswoman declined to comment. A Wells Fargo spokeswoman directed calls to a Wachovia Securities spokeswoman, who declined to comment.


Indeed, UBS has been slammed by the credit crisis, as well as how it marketed auction-rate securities, the latter of which has triggered a series of state investigations into whether investors were duped into buying these forms of short-term debt.


That bad publicity has wrecked havoc on the Swiss firm's vaunted wealth-management franchise, which typically caters to the uber-rich.

Feb 3, 2009 10:20 am

Here's how this is likely to play out for UBS and WS

1) Wells announces purchase of UBS US Wealth Managment- 8000 brokers, huge average production per FA for the industry- 90% on contracts - no need to pay retention

2) Wells THEN announces the "retention" package for Wachovia-  It applies to $500k or higher producing FAs on 2008 production actuals. 16k brokers quickly evaporates to 8k-10k,

3) A new much higher producing "Wells Fargo Securities" emerges, very much on par and competitive to the SB/Morgan operation.  All Quintile 1 & 2 focused.

FACTS: UBS will not talk to anyone < their Quintile 1 or 2 levels- period
            Smith Barney/Morgan now talking only to $500k+ FAs (low LOS exception ok in Rising Star)
            Deals are dropping like flies! BIG deals will be 100% on the up within 30 days.  Mark my words. Far fewer chairs will be available to fill.


Feb 3, 2009 10:52 am


 
Feb 3, 2009 11:23 am
burtonfinancial1:

Here's how this is likely to play out for UBS and WS

1) Wells announces purchase of UBS US Wealth Managment- 8000 brokers, huge average production per FA for the industry- 90% on contracts - no need to pay retention

2) Wells THEN announces the "retention" package for Wachovia-  It applies to $500k or higher producing FAs on 2008 production actuals. 16k brokers quickly evaporates to 8k-10k,

3) A new much higher producing "Wells Fargo Securities" emerges, very much on par and competitive to the SB/Morgan operation.  All Quintile 1 & 2 focused.

FACTS: UBS will not talk to anyone < their Quintile 1 or 2 levels- period
            Smith Barney/Morgan now talking only to $500k+ FAs (low LOS exception ok in Rising Star)
            Deals are dropping like flies! BIG deals will be 100% on the up within 30 days.  Mark my words. Far fewer chairs will be available to fill.


 
Are you sure UBS has gotten that particular on recruiting?
Feb 3, 2009 11:24 am
burtonfinancial1:

Here's how this is likely to play out for UBS and WS

1) Wells announces purchase of UBS US Wealth Managment- 8000 brokers, huge average production per FA for the industry- 90% on contracts - no need to pay retention

2) Wells THEN announces the "retention" package for Wachovia-  It applies to $500k or higher producing FAs on 2008 production actuals. 16k brokers quickly evaporates to 8k-10k,

3) A new much higher producing "Wells Fargo Securities" emerges, very much on par and competitive to the SB/Morgan operation.  All Quintile 1 & 2 focused.

FACTS: UBS will not talk to anyone < their Quintile 1 or 2 levels- period
            Smith Barney/Morgan now talking only to $500k+ FAs (low LOS exception ok in Rising Star)
            Deals are dropping like flies! BIG deals will be 100% on the up within 30 days.  Mark my words. Far fewer chairs will be available to fill.

 
Hogwash.  Firms are ALWAYS looking for good people doing good, clean business. ALWAYS.
 
Secondly, at this point the move to make is independent and not to another wirehouse.
 
Third at WS I finished 2008 #4328 out of 11,126 which is in the second quintile and I did not crack 400K in 2008.  
 
Finally, a broker doing 300K is profitable at WS and isnt at these other places that is what drives the deals NOT just being "a big producer"  A profitable broker who leaves is called REGRETED ATTRITION.   If the break even point at these other firms is 150k-250k higher then of course, they arent going to be interested in talking to a broker who isnt profitable.
 
Quit paiting WS with the same brush as these other firms whose costs are much higher. 
Feb 3, 2009 11:45 am
BukiRob:
burtonfinancial1:

Here's how this is likely to play out for UBS and WS

1) Wells announces purchase of UBS US Wealth Managment- 8000 brokers, huge average production per FA for the industry- 90% on contracts - no need to pay retention

2) Wells THEN announces the "retention" package for Wachovia-  It applies to $500k or higher producing FAs on 2008 production actuals. 16k brokers quickly evaporates to 8k-10k,

3) A new much higher producing "Wells Fargo Securities" emerges, very much on par and competitive to the SB/Morgan operation.  All Quintile 1 & 2 focused.

FACTS: UBS will not talk to anyone < their Quintile 1 or 2 levels- period
            Smith Barney/Morgan now talking only to $500k+ FAs (low LOS exception ok in Rising Star)
            Deals are dropping like flies! BIG deals will be 100% on the up within 30 days.  Mark my words. Far fewer chairs will be available to fill.

 
Hogwash.  Firms are ALWAYS looking for good people doing good, clean business. ALWAYS.
 
Secondly, at this point the move to make is independent and not to another wirehouse.
 
Third at WS I finished 2008 #4328 out of 11,126 which is in the second quintile and I did not crack 400K in 2008.  
 
Finally, a broker doing 300K is profitable at WS and isnt at these other places that is what drives the deals NOT just being "a big producer"  A profitable broker who leaves is called REGRETED ATTRITION.   If the break even point at these other firms is 150k-250k higher then of course, they arent going to be interested in talking to a broker who isnt profitable.
 
Quit paiting WS with the same brush as these other firms whose costs are much higher. 



Buki, - I'm NOT painting other firms with the same brush. I'm pointing out the FACT that no matter what quintile you're in at WS or any other firm- there's no 'entry' opportunity at UBS and SB/Morgan today unless you fit THEIR quintile 1 or 2. This was NOT the case only recently.  I also agree with you on opportunities- there are plenty of places to go with < $500k in production, I did not broadbrush all firms, but 'big' upfront deals do not apply in those cases do they now. Before you respond, I 'get' the fact that many don't want to sign up for a huge check and have it all stolen back over a 9 year deal either and indy is pretty darn attractive.  What I guess I should have said in more plain language is this; the $400k producer like yourself who MAY be expecting a substantial retention bonus is not going to find bigger money to compete with like a much larger producer would. That will be the case for the big guy.  The game is changing fast. 

Feb 3, 2009 11:48 am

Someone said that 50% of WS/AGE advisors are doing 300k or less.  To say that that many people will be without a job seems pretty harsh.  Hate so see something like that.

 
 
Feb 3, 2009 11:53 am

AGE Fiscal Year 2007 - 67% of FCs did not qualify for Crest Club. The threshold for Crest Club was $350k. Do the math.

Feb 3, 2009 12:25 pm

Wow am i glad I got out now!

Feb 3, 2009 1:17 pm


Perhaps this sheds more light

UBS/Wachovia
Venture Would Make Sense, Compensation An Issue

By Helen Kearney and Donna Mitchell

February 3, 2009


Reports surfaced today that UBS and Wachovia Securities are
in talks to create a joint venture of their wealth management units. Details
were scarce, but if it happens, it would combine UBS’ 8,000 advisors with
Wachovia Securities 16,000.



The story was first reported in the New York Post’s website. Both companies
declined to comment on the rumors. One market observer, though, said he had
heard this idea floating around for a couple of weeks. And from the two
companies’ perspectives, it seems to make sense, he said.



When Wells Fargo bought Wachovia in a deal completed Dec. 31, it was mostly
interested in the commercial banks, the source said. And it will be happy to
now put the brokers it acquired into a venture like this and create a more
substantial wealth operation. And from UBS’ perspective, he said the Swiss
company has never been pleased with the U.S. operation, especially now with the
litigation problems involving UBS advisors allegedly helping wealthy clients
evade U.S. income taxes by hiding assets offshore. And that was just after the
image problems suffered by UBS as a result of the meltdown in the auction-rate
securities market last year.  



Another source said that this move could be in response to the announcement
last month of a joint venture between Citigroup’s Smith Barney unit and Morgan
Stanley, which will create a 22,000-advisor wealth management unit. In that
case, Morgan Stanley will buy 51% of Smith Barney with the option to increase
its share over the next five years until it would conceivably own all of it.



The source said that UBS might trim its client base after this to focus on just
the wealthiest clients. Moreover, he noted that advisor compensation would
likely become an issue, as UBS advisors are higher producers than their
counterparts at Wachovia.

Duh


 

Feb 3, 2009 2:05 pm

Sorry but that last sentense makes absolutely no sense.  On average UBS brokers are higher producers.  So?  Last time I checked, higher producers make more money what is the issue?   Compensation plans wont be addressed until next year anyway.   Both would operate under current compensation plans.   IMO WS has better platfoms and basically the same OS. 


 
 
This venture makes sense on so many levels I wouldn't be surprised if happens.
Feb 3, 2009 6:53 pm

How do you figure 90% of UBS FAs are on contracts?   Try less than 30% or maybe 40%.


It is true that UBS will rarely look at levels 3 or 4.
Feb 3, 2009 9:51 pm

no deals for anyone under Q1/Q2 @ UBS (about 600k 65mm for los 14+)



national bom meeting next week so doubt any announcement comes before then on deal changes.



Think the Swiss are not happy with WM on a big scale (advisors make too much money compared to swiss advisors) will look at all options, I would not be surprised if something from JP Morgan doesnt happen or a WB securities joint venture with UBS & Wells retaining a piece.

Feb 3, 2009 9:55 pm

ABOM


I agree. JPM may be a suitor for UBS WM US