(Bloomberg) -- UBS Group AG, which said last month it’s looking for ways to cut costs, is eliminating some management positions in its U.S. wealth unit and reducing the number of financial advisers recruited from competitors.
The headcount reduction will mostly hit middle and senior managers, including some at the unit’s main offices in Weehawken, New Jersey, and New York, Tom Naratil, president of wealth management for UBS in the Americas, said in an interview. UBS declined to provide a specific number of cuts. The role of regional manager also will be eliminated, with some promoted and others reassigned, the Zurich-based lender said Wednesday in an internal memo.
The Swiss bank plans to decrease by 40 percent the number of financial advisers it recruits from competitors and how much it spends on those efforts starting this month, Naratil said. UBS declined to give current recruiting figures. The bank scooped up dozens of advisers last year when Credit Suisse Group AG exited U.S. wealth management.
“We took advantage of that,” Naratil said. “That’s one of the reasons why we can step back from the recruiting table.”
The rise of independent wealth-management firms has increased competition for staff. Advisers and private bankers have left big banks and brokerages to start boutiques in recent years, hoping to exert more control over investment decisions and keep a greater share of revenue.
UBS, the world’s largest wealth manager, said it will increase target compensation for financial advisers in the U.S. The most successful can receive as much as 50 percent of the revenue they bring in, compared with 45 percent. It’s also getting rid of nuisance fees such as ticket charges, and is rewarding advisers based mainly on productivity and length of time at the company, said Naratil, who’s worked at UBS and a predecessor company for 33 years.
“I believe in paying the people here more than the people who are not here,” he said of spending less on recruiting and rewarding loyalty.
Advisers will earn an additional upfront payment by committing before they retire to pass clients to another UBS adviser, he said.
The new compensation rules are part of an 8-page document that was scheduled to be shared with employees Wednesday as the bank replaces a system that took 34 pages to explain, Naratil said. The pay changes will take effect next year and apply to the bank’s U.S. wealth-management advisers, who numbered 7,145 as of March 31.
UBS will be using the savings generated from the cuts to invest in technology training for advisers and add more financial planners in the field, he said. Last month, UBS said it invested in financial-technology company SigFig Wealth Management LLC and announced a partnership to develop customized digital tools for the bank’s advisers in the Americas.
--With assistance from Jeffrey Vögeli. To contact the reporters on this story: Margaret Collins in New York at [email protected] ;Zeke Faux in New York at [email protected] To contact the editors responsible for this story: Christian Baumgaertel at [email protected] Dan Reichl, Steven Crabill