A story in the Financial Times teasingly suggests UBS US Wealth Management is in for a big change at the top. Marten Hoekstra, CEO of the US unit, may be ousted or get a wingman, it says.
A firm spokesperson said UBS doesn’t comment on rumor. But on the face of it, Hoekstra’s departure would seem ironic, since the U.S unit actually brought in new client money in the previous quarter while its international and Swiss operations have been hemorrhaging clients and assets. However, much of that new money can be attributed to clients who have followed their advisor to UBS during its aggressive FA recruiting campaign in which it has offered talented FAs from competing firms as much as 250 percent of trailing 12-months production in upfront money (a forgivable loan, actually) to join.
A change could be coming for a simpler reason, too: Hoekstra could just be running out of time to ramp up a business that hasn’t been able to match its peers in the U.S. Hoekstra discussed his goals for the U.S. business and the difficulties facing it with Registered Rep. three years ago in this interview and again for this story last year. The fact is, he has one year left in a 5-year plan (2005-2010) that aimed to achieve $1 trillion in client assets and 20 percent profit margins. The U.S. unit currently has $650 billion in client assets—$100 billion less than it did 18 months ago—and margins are closer to 10 percent.
Brokers who spoke with Rep. say the firm has lost its bearings and morale is still low. The news is a constant worry, they say. The firm lost a lot of clients since the firm locked horns with regulators over tax-dodging US clients. In February the firm settled with the SEC and Department of Justice regarding criminal and regulatory violations related to its cross-border business, but the IRS is still pursuing civil litigation relating to the names of 52,000 UBS client names. (UBS has given American authorities 250 names of its clients and paid a $780 million fine.) The U.S. pursuit over UBS’ U.S. client book could quite literally pit Swiss tax law (tax evasion is not a crime in Switzerland) against the U.S. tax code. UBS says it will confiscate the client data rather than let it fall into the hands of the U.S. government. In short, an international brouhaha is developing between the two governments that could create unflattering headlines in the U.S. for UBS for months.
Of course, that’s just a macro sideshow, one that FAs at all big-named and embarrassed financial institutions have been dealing with for, oh, more than a year now. More particularly for UBS, one FA lamented that Hoekstra is “smart as a whip; it’s the people below him that are inept.” That said, mid-level management has been changed around too much, too, he says—and that ultimately comes from Hoekstra. “For the past few months, they’ve been letting go or moving around mid-level management all over the country—several people in my region have been replaced,” says one Midwestern advisor. “This is the third restructuring Hoekstra has done,” he says.
