UBS Announces New Comp Plan; Comp Focused on FA Loyalty and Future Production

UBS’ Wealth Management Americas unit today unveiled a new compensation program that will reward the firm's biggest financial advisors for loyalty and growth. That’s a departure from other brokerages where compensation is typically based on trailing commissions rather than on growth.

Advisors who qualify will get long-term forgivable loans. It's no surprise the firm wants to reward loyalty, at a time when a lot of UBS' top talent has been heading for the exits.

The program applies to advisors who deliver a minimum of $500,000 in revenue in 2010. This group, estimated at some 3,000 of UBS’s network of 7,000 advisors in the Americas, would be entitled to a seven-year forgivable loan equivalent to 65 percent of next year’s production, or commissions, according to sources.

One person familiar with the program noted that incentives for advisors would clearly grow in line with length of service. Under the program, for example, an advisor with a specific length of service and $1 million in production in 2010 would receive a $650,000 loan in December 2010, forgivable over seven years, this person briefed on the program explained.

Paula Polito, the former top Merrill Lynch marketing and strategy executive, who recently joined the UBS Renewal Team formed by UBS Wealth Management CEO Bob McCann, confirmed the broad outlines of the program, dubbed Growth Plus, in an exclusive interview with Registered Rep.

The plan was announced internally at UBS today, and presented by McCann at a meeting of the firm’s 300 top producers, known as the Chairman’s Council. While Polito declined to provide specifics of the grid system or the two components of the program UBS is rolling out – that is, prospective earnings and length of service – she was clear the plan was tied together with the brokerage’s goal of unveiling a “renewal” plan by early March. “It rewards future success,” she said.

The new UBS plan comes as the Americas brokerage unit of the Swiss bank is under pressure to regain its financial footing – and to catch up with competitors further along the road to recovery after the worst of the credit crisis has passed.

At the same time UBS is racing to restore its brand image –and fend off these same competitors who have been pursing some of its top advisors. Indeed, morale at UBS in the Americas recently sunk to new lows as turnover climbed among the firm’s top 200 FAs who contribute 70 percent of revenue.