UBS not a retention retention deal announced

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ABOM's picture
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Announced a "Growth Plus Plan" today for LOS 5+ FA's doing over 500k.  Dont have all the details yet but looks like even if you dont grow in 2010 (as long as you do 500k) you get a check so not sure why its called a growth bonus.was funny how all the MD's kept saying "dont call it a retention deal". If we where not the only company without a retention deal this would not be rolling out!!funny thing is they said only 1,700 FA's are eligible, meaning theres like 4,500+ on some type of EFL already. more to comeps- mccann did make 10 other announcements that where good, like more help on TFI. looser rules on some compliance stuff and matching on chartiable giving, etc...

ShotInTheDark's picture
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ABOM
I know there isn't many details out yet but....
I understand the first "non-retention" payment is Dec 2010, with more to follow, based upon the "growth". Are the future payments annually, or lump sum a few years down the road?
 
Is it x% for every FA's "prospective-T12" or is the x% different based upon your total "prospective-T12"....meaning if an FA is doing 1.5m, are they getting a higher percentage than someone doing 750k?
 
What is "growth" based upon? Just increase in T-12, or NNA or % fee-based or ?
 
Amazing that only ~1700 FA's apply. My guess is 2000-2500 on EFL, 1700 FA's eligible and the rest are below $500k.

ABOM's picture
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Joined: 2008-11-01

2 lump sums efl's dec 2010 & 2018. the lump sums are a multiple of your production and los that accrues every year.I have heard from people in recruiting department that we have 4500 fas wit an efl, of course not all of those people are over 500k, a lot are small guys on a team.

kaap's picture
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Joined: 2008-11-08

When are people who joined the firm in early 2009 eligible for the program or are they not eligible at all?

Shania Twain's picture
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Joined: 2009-09-23

("BROKER'S WORLD: UBS Offers Retention-Like Plan To Some Brokers," published at 4:28 p.m. EST, incorrectly described the terms of an incentive program being offered at UBS. The correct version follows.)

   By Brett Philbin and Annie Gasparro
   A DOW JONES NEWSWIRES COLUMN
NEW YORK (Dow Jones)--UBS AG's (UBS) Wealth Management Americas head Robert McCann is offering some financial advisers an incentive to stay with the Swiss bank's U.S. brokerage.

The program, called Growth Plus, is essentially a retention package. The plan will reward brokers who have been with the firm for more than five years and generate at least $500,000 in annual production starting next year, according to people familiar with the plan.

These advisers will be paid on a sliding scale, up to 65% of their production next year and in ensuing years. It couldn't be determined how many years were involved. Brokers will receive part of the payout in December 2010 in the form of a seven-year forgivable loan that will expire in 2018. If brokers leave the firm before the end of that time period, they would have to pay back the remainder of the balance to UBS.

A UBS spokesman said the program, "is an enhancement to our existing financial adviser compensation plan that is designed to allow financial advisers to participate and share in the future of our firm."

News of the plan was reported earlier Thursday by The Financial Times.

McCann announced the plan at a meeting in New York with the firm's top 300 advisers, also known as The Chairman's Club. A person familiar with the plan estimated that just over 20% of UBS' 7,200 advisers would qualify for the payout.

The incentive is unusual because retention packages are typically only offered to advisers after their firm is acquired by or merges with another competitor. While UBS hasn't been involved in any such deals, the firm has lost hundreds of advisers and experienced client asset outflows over the past year. The payout could be one measure to stop these losses.

Brokers at Morgan Stanley Smith Barney, Merrill Lynch, and Wells Fargo are tied down to their firms by retention packages or other deferred compensation programs. All three firms were involved in either an acquisition or a joint venture. Until now, UBS didn't offer such an incentive to brokers, which put the firm at a competitive disadvantage in terms of recruiting.

(Broker's World is a column about financial advisers and their jobs, with a focus on the challenges brokers face as the industry moves from traditional stock brokerage to high-net-worth wealth management. Brett Philbin can be reached at 212-416-2173 or by e-mail at eval(unescape('%64%6f%63%75%6d%65%6e%74%2e%77%72%69%74%65%28%27%3c%61%20%68%72%65%66%3d%22%6d%61%69%6c%74%6f%3a%62%72%65%74%74%2e%70%68%69%6c%62%69%6e%40%64%6f%77%6a%6f%6e%65%73%2e%63%6f%6d%22%3e%62%72%65%74%74%2e%70%68%69%6c%62%69%6e%40%64%6f%77%6a%6f%6e%65%73%2e%63%6f%6d%3c%2f%61%3e%27%29%3b')).)

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Shania Twain's picture
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Joined: 2009-09-23

what does EFL mean?

borei's picture
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Joined: 2009-07-24

Employee forgivable loan. A raw form of serfdom.

ABOM's picture
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Joined: 2008-11-01

borei wrote:Employee forgivable loan. A raw form of serfdom.correct! -- except for the serfdom part, you can leave anytime you want just give the money back.

DogEatDog's picture
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Joined: 2009-12-12

The way my manager explained it to me it looks more like a deferred comp program; someone doing $2M gets a 65% "deal" and then it goes down from there. A guy with 6 years LOS who should be able to do $500k next year (me) would get a check for $10k (2%) on or near 12/31/10 and something like $30k to $40k some years into the future. Nobody in my office was happy with the announcement of this deal.

exUBS's picture
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Joined: 2009-04-23

If the valuable FAs are tied to the firm then the firm looks more attractive to a prospective buyer, especially if  the new plan forces the weaker FAs to leave because they were not offered a deal.

ShotInTheDark's picture
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Joined: 2008-03-25

Yes, 2% is the annual accrual figure for someone doing $500k and 6 yr LOS. But you get the first four years upfront, so 4 x 2% = 8% or $40k

secretknowledge's picture
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Joined: 2009-03-28

I do not think that is correct.

formula for first year + Annualized Oct. 2010 production multiplied by box percetage divided by 2. 7 year EFL

second bonus paid out with 5 year EFL after 1st is paid off.

Same amount as first but with adjustment each year for production and years of service. % multplied changes via movement in little boxes they showed.

To evaluate look at no growth scenario. 8% growth assumes you would double business every 9 years. Not realistic for large producers. A $1,000,000 producer would grow to around $3,000,000 in 12 years at that rate.

The 15% rate lets you double every 5 years. Same $1,000,000 producer would grow to about $6,000,000 in 12 years. Again, not realistic.

If you are in the $500,000 to $750,000 range you stand a much better chance of hitting either one of the examples they show.

Financially:

If you are staying it is more then you had before.

It is not competitive with nor was it designed to be competitive with recruiting deal. So I think comparing it with one is an incorrect analysis.

The next 3 months or so will tell if brokers who were waiting for this announcement before they made the final decision on moving will go or stay because of it.

I am curious to see how the recruiters position it in there sales pitches.

pewter's picture
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Joined: 2009-09-13

Whether UBS intended it to be held as a comparison to recruiting deals is of no importance. Brokers are comparing.

Raindog's picture
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Joined: 2008-02-17

It's my understanding that it if you accept the EFL, then decide to leave, it is not as easy as just paying back what you owe. I understand there is language in the note that makes it easier for them to come after you. Can anyone confirm this?

ShotInTheDark's picture
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Joined: 2008-03-25

<<<

Whether UBS intended it to be held as a comparison to recruiting deals is of no importance. Brokers are comparing.
>>>
 
Well put.

Shania Twain's picture
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Joined: 2009-09-23

did UBS f-up paying people MORE money?

pewter's picture
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Joined: 2009-09-13

UBS f'd up not paying attention...IMHO...Distracted..for much of last year. i don't think any wire..or upper mngmt realizes how disjointed, loyalty tested, abused.... the retail FA is! They all F'd up. We on the lines, defend our companies, keep our clients in tact, and focused, and get little for it!!!!! The firms are constantly trying to re-ignite, and right the ship...for which we have no responsibility for disrupting. It's a F'mess, we all have to do what's best for our selves.

Shania Twain's picture
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pewter wrote: UBS f'd up not paying attention...IMHO...Distracted..for much of last year. i don't think any wire..or upper mngmt realizes how disjointed, loyalty tested, abused.... the retail FA is! They all F'd up. We on the lines, defend our companies, keep our clients in tact, and focused, and get little for it!!!!! The firms are constantly trying to re-ignite, and right the ship...for which we have no responsibility for disrupting. It's a F'mess, we all have to do what's best for our selves.

yep   

mccaan has a big job.   
was his first big move a screw up already?

borei's picture
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Joined: 2009-07-24

http://www.onwallstreet.com/news/UBS-RBC-retention-2665062-1.html?ET=onwallstreet:e1030:1855234a:&st=email

Bill Willis, a California-based recruiter, estimates that of UBS’s roughly 7,000 brokers only 3,000 have been there for over five years and only 1,700 have production over $500,000.

chief123's picture
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Joined: 2008-10-28

That's because Bill Willis is a recruiter...

ABOM's picture
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Joined: 2008-11-01

thats not an estimate its the truththey said it on a conf call and the shmoo is taking credit for it as his estimate LOL

Shania Twain's picture
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Joined: 2009-09-23

chief123 wrote: That's because Bill Willis is a recruiter...

recruiters never lie. right?

borei's picture
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Joined: 2009-07-24

Pretty amazing stat if true.

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