According to a source familiar with the details, the 8,700 jobs UBS plans to cut by the end of 2010—for forecasted cost savings of roughly $3.5 billion—will include 2,000 in the Wealth Management division, many of them financial advisors.
“Most of them will be support staff, but there will be a lot of advisors in that 2000 number, too,” the source says. Decisions to let an FA go will be based on production and/or length of service, says the source. Those with at least $250,000 in 12-month trailing production and up will be okay. Some newer financial advisors with lower production numbers will also be allowed to stay.
According to UBS FAs discussing the news on the Registered Rep. Advisor Forum, the news of the impending cuts did not go over well. Advisors officially got the news on April 8 in an internal call with Marten Hoekstra, Head of UBS Wealth Management U.S. “UBS has made it blatantly clear that they want to be known as a high net worth firm and unless you have that kind of business right now—you’re done.”
In recent weeks, individual cuts to discretionary spending items have been getting wide play in the press: Manhattan staff moving to Jersey, no more free coffee? In Switzerland, subsidies for car lease payments and annual employee stipends for gym and parking? Gone.
The sad fact is that according to the firm’s earnings preannouncement, Wealth Management U.S. was the sole bright spot in the firm’s dismal first quarter results—a loss CHF 2 billion. Wealth Management Americas brought in CHF 16 billion in net new client assets in the quarter but that couldn’t offset the outflows elsewhere: The firm suffered CHF 23 billion in client asset outflows from its Wealth Management and Swiss Bank division, which according to the firm’s Wednesday release was “mainly recorded after the announcement of the [$780 million] settlements with U.S. authorities in connection with their investigations into our cross-border services for U.S. private clients.”
The IRS’ continued pursuit of some 50,000-plus tax dodging American clients of the firm recently inspired UBS to instill a moratorium on FA travel outside of an FA’s home country. At the end of March, the firm’s top private banker for the Americas, Martin Liechti, was placed on paid leave by UBS. That makes him at least the third private banker directly or indirectly affected by the IRS’ investigation. The firm’s former global wealth management and business banking head, Raoul Weil, is still considered a fugitive after he disappeared in January, two months after being indicted by federal authorities on conspiracy charges.