Editor's Note: this is the corrected version of an earlier story that ran on our Web site.
Brokers at UBS PaineWebber received a double hit of bad news in early December during this tough time for brokerages. Not only were they informed that the bonuses they receive for assets under control were being cut, but expense accounts are being trimmed as well.
Several components of the compensation plan for 2003 have not changed. However, there are a couple of specific alterations related to monthly "assets under control" and expense accounts for individual brokers.
PaineWebber producers will see a 50 percent cut in bonuses for assets under control, dropping the bonus for producers with less than $100 million under management to 50 basis points from 1 percent; higher-end producers with $500 million to $1 billion in assets are seeing a bonus reduction to 12.5 basis points from 25 basis points.
Meanwhile, in another sign of tightness in the retail brokerage industry, PaineWebber has slashed annual expense accounts for brokers. Previously, according to sources, expense accounts were equal to 0.75 percent of assets under production; now, they vary from $1,500 to $10,000, depending on certain parameters.
"My expense account was over $5,000," says a rep. "At $2,000, I have to very choosy as to what I do now."
The reason behind the cuts, sources say, is because of the economy, the market conditions and slow business at the firm. "They’re cutting every which way they can," a broker says.
Several aspects of the compensation plan have not been altered, including bonuses for new assets brought in, the productivity and length of service awards and certain ticket charges.
The belt-tightening comes at a time when various recruiting sources say the firm plans on expanding next year, at least in terms of hiring. The firm expects to hire another 500 brokers next year.