UBS's U.S. wealth
business sees profits rise on client activity, lower
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[April 29, 2017]
By Elizabeth Dilts
NEW YORK (Reuters) - Swiss bank UBS AG
reported Friday that profits for its Wealth Management Americas business
rose 8 percent over last year as higher operating income, client
activity and cuts to recruiting offset higher employee pay doled out to
UBS Wealth Management Americas Chief Executive Tom Naratil's commitment
to spend less on recruiting showed as the bank reported recruitment
loans to financial advisers fell 9 percent to $2.9 billion, from $3.25
billion last year.
This includes new recruitment loans and existing ones for advisers that
continue to be paid out over a period of several years.
UBS AG Chief Financial Officer Kirt Gardner said on a call with analysts
that the U.S. wealth business had a higher concentration of recruitment
loans from the years following the 2008 financial crisis when "we had a
high degree of recruitment."
"We've refocused our (attention to) retention rather than net
recruiting...and you'll continue to see those loans come down," a
benefit that will show up in lower expenses by the fourth quarter this
year, Gardner said.
Compensation for new recruits fell 1 percent to $197 million this
quarter from last year. The firm reported it had 6,969 advisers this
quarter, down 176 from the first quarter last year and 56 fewer than in
the fourth quarter last year.
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Switzerland's national flag flies under the logo of Swiss bank UBS
in Zurich, Switzerland April 24, 2017. REUTERS/Arnd Wiegmann
Overall, financial adviser compensation rose 11 percent to $791 million this
quarter from $714 million last year.
The results were in line with projections UBS Wealth Management Americas Chief
Executive Tom Naratil made last summer when he announced they would back away
from the aggressive and costly recruiting practices that had become an industry
UBS's North American wealth business is now aiming to have between 6,500 and
7,000 advisers, and to entice their top advisers to stay with the firm by paying
However, slowing recruiting was a drag on the quarter's net new money inflows.
The firm reported $1.9 billion in net new money this quarter, down dramatically
from $13.6 billion in net new money in the first quarter of 2016.
During the first quarter last year, inflows were predominantly driven by money
brought in by newly recruited advisers, according to the bank's quarterly
(Editing by Bernadette Baum)
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