Brokers at UBS Securities received a double hit of bad news in early December. Not only were they informed that the bonuses they receive for assets under management were being cut, but expense accounts are being trimmed as well.

Several components of the compensation plan for 2003 have not changed. However, there are a couple of specific alterations related to monthly “assets under control” and expense accounts for individual brokers.

PaineWebber producers will see a 50 percent cut in bonuses for assets under control, dropping the bonus for producers with less than $100 million under management to 50 basis points from 1 percent; higher-end producers with $500 million to $1 billion in assets are seeing a bonus reduction to 12.5 basis points from 25 basis points.

Meanwhile, in another sign of tightness in the retail brokerage industry, PaineWebber has slashed annual expense accounts for brokers. Previously, according to documentation obtained by Registered Rep., expense accounts were equal to 0.75 percent of assets under production; now, they vary from $1,500 to $10,000, depending on certain parameters.

“My expense account was over $5,000,” says a rep. “At $2,000, I have to be very choosy as to what I do now.”

The reason behind the cuts, sources say, is because of the economy, the market conditions and slow business at the firm. “They're cutting every which way they can,” a broker says.

Several aspects of the compensation plan have not been altered, including bonuses for new assets brought in, the productivity and length of service awards and certain ticket charges.