Robert J. McCann reported for work at UBS Tuesday in Weehawken, N.J. After weeks of rumors about his appointment, the firm announced it had hired him as CEO of its wealth management operations for the Americas early Tuesday morning. McCann was freed to go back to work several weeks ago, following a legal settlement with former employer Bank of America over a non-compete agreement. The announcement of McCann’s hire was delayed until today, however, because he was only approved by the firm’s board Monday night.
In an interview with Registered Rep., McCann said the wealth management division would not be put on the block, despite rumors that UBS is dressing it up for sale to boost its capital position. He also vowed to cut costs for the unit, and raise pre-tax profit margins to 15 percent over the course of “the economic cycle.” The Americas division posted a pretax loss for the second quarter of CHF221 million, and has lagged behind other divisions of the bank in profitability. The firm also posted net client asset outflows of 5.8 billion francs for the quarter, which is down from the prior quarter. The firm is expected to post a loss for the third quarter next week.
McCann carefully skirted the question of whether he would recruit financial advisors or other talent from Merrill Lynch. “Here is what I am not interested in doing. I am not interested in creating Merrill 2.0,” said McCann. “What worked for us at Merrill and other businesses over the past 25 years or so was great for that time, and it was great for that company. But what I want to do here is build a culture and a business for this present time, and our position today in the marketplace.”
McCann said for the time being his focus would be on the financial advisors already at UBS, where employee morale and client trust are at a low following the firm’s trouble over Swiss accounts with the IRS. “Will I, in time, look across the industry for other talented people, to make them part of this company?” asked McCann. “Yes, I sure will. I sure will. So, it will be a combination of people who are here today, and people from across the industry—this will be the leadership team and the production team here at UBS.”
In the Registered Rep. interview, McCann said he will spend the next 30 to 60 days immersing himself in details of the firm, putting together a transition team, which will include executives from the ranks of UBS, and defining the best strategy and organizational structure for the division. McCann also plans to visit UBS advisors around the country to get to know them. He enjoys interacting with people, he said, and these visits should help him gather information about the firm and build a strong company culture.
McCann takes the helms at UBS wealth management with mostly positive reviews from his past career at Merrill. Dick Bove, an analyst at Rochdale Securities, said in a people business like brokerage, leadership can make a significant difference in the overall success of a company like UBS. “Not everyone is equal and not everyone has the same drive and the same ability to communicate, to innovate and to be creative,” he said.
McCann settled with his former employer Bank of America, parent company of Merrill Lynch, just a few weeks ago over a non-compete agreement that would have prevented him from returning to work until 2010. Before his departure in January of last year, McCann had worked at Merrill for 26 years. The UBS wealth management unit employs close to 8,000 financial advisors, roughly half the size of the thundering herd McCann once led at Merrill Lynch.
McCann comes aboard following a tax lawsuit UBS settled this year between the U.S. and Switzerland, involving 52,000 secret Swiss accounts, as well as controversy over products, including a blow-up in auction rate securities. Then there is the morale of advisors and employees, which took a hit like at other firms, and must be restored too at UBS for McCann to push through his growth agenda.