UBS Wealth Management Americas is cooling down its recruitment efforts and ramping up its focus on advisor retention, as it rolls out a new operating model that will see the firm cut the number of advisors it recruits annually by 40 per cent.

UBS Wealth Management Americas has unveiled details of a new operating model, in a move it said is designed to push decision-making and resources closer to clients, and drive organic growth through a tougher focus on advisor retention.

“We are realigning resources and investing in our people and platform, while putting a stake in the ground that relentless and costly advisor recruiting is not sustainable as a growth strategy in this industry,” said Tom Naratil, president at UBS Americas and WMA. Naratil took over the Swiss bank’s US wealth management operations in January, and was tasked with boosting the unit’s profitability.
 
Several changes were announced, including: de-layering the field structure; enhancing and simplifying advisor compensation; aligning field manager compensation; and shifting home office resources to the field.

Firstly, WMA is to be organized into four divisions, 43 markets and 208 branches; previously, its structure included two divisions, eight regions, 63 complexes and 189 branches.

“By eliminating the regional layer and realigning into larger markets, WMA is giving field leaders broader spans of control and moving decision-making authority closer to clients,” UBS said.

Meanwhile, as part of a shift in focus from recruiting to retaining and rewarding “best advisors,” WMA said it is introducing a “simpler advisor compensation plan that is easier to understand and rewards productivity, growth and loyalty.”

This includes increased payouts for advisors with the largest books of business, incentives for advisors to form teams, and a program for advisors seeking to transition out of the business and transfer their practice to another UBS advisor.

Finally, WMA is modifying its compensation plans for field leaders so that they are “rewarded and held accountable for the decisions they make.” It is also streamlining management to “reinvest in staff and resources that make a tangible difference for clients and advisors,” UBS said. This will reportedly involve eliminating certain senior roles.

In an interview with the Wall Street Journal, Naratil described the shake-up as an effort to “eliminate the bad costs,” or spending tied to management overhead, bureaucracy and recruitment. “We’re shifting that into spending on technology, people closest to advisors and compensation for advisors who are here,” he reportedly said.

Indeed the announcement follows WMA’s recent investment and alliance with SigFig to develop financial technology for the former firm (see here), and last month's announcement that WMA would collaborate more closely with the UBS Wealth Management business outside the US to “achieve synergies and enhance services.”

Interestingly, the move also comes as some industry players, such as Bank of America Merrill Lynch and US Trust, have recently pledged to continue aggressively hiring financial advisors - or indeed accelerate their recruitment drive.

In terms of the UBS WMA management line-up going forward, Brian Hull will continue as head of the client advisory group, overseeing four divisions, led by: Jason Chandler (northeast), Bill Carroll (central), Brad Smithy (southeast), and Lane Strumlauf (west). John Mathews will continue as head of private wealth management.