UBS, the smallest wirehouse by advisor headcount, gets smaller still
How low can you go?
At UBS, lower still.
An internal ranking of U.S.-based advisors dipped below 6,000 last week, according to three sources familiar with the matter. A fourth source says headcount is above 6,000 if one counts producing branch managers as well as international wealth managers based in the U.S. The firm says the internal ranking is not representative of its entire advisor force in the U.S.
The Swiss bank’s most recent earnings report gives a higher number — 6,496 — for its Americas business. That figure includes advisors in Canada and Latin America.
What is clear is that the firm’s current headcount is a far cry from the more than 8,700 advisors UBS counted in its Wealth Management Americas business for the first quarter of 2009 when the company was an aggressive courter of advisor talent.
“They were mega recruiters. No one did it better,” says Danny Sarch, a recruiter who placed advisors at the firm.
The firm’s steadily shrinking advisor ranks are an indication of just how much the wirehouse world has changed in the decade since the financial crisis when the big four firms were much bigger by headcount.
For starters, the firm has pivoted in recent years to focus more on productivity gains. It’s also taken actions to shrink its brokerage force.
For example, in October 2009, the Swiss-owned firm sold off 56 branches and about 300 advisors in smaller markets to Stifel Financial.
In 2016, UBS significantly reduced recruiting from competitors — and saved considerably on hiring costs. The firm’s recruitment loans to financial advisors fell to $2 billion for the most recent quarter from $3 billion at the end of 2016 when UBS counted about 7,000 advisors in its Wealth Management Americas business, according to company earnings reports. The firm has since changed how it reports these figures and merged its Wealth Management Americas with its other wealth management business to create greater efficiencies.
In 2017, following Morgan Stanley’s lead, UBS left the Broker Protocol. This industry accord permits advisors moving between member firms to take basic client contact information with them and makes recruiting easier.
The wirehouse’s policy shift is notable given its history of active recruiting efforts. It picked up a number of advisors during the financial crisis, recruiters say. It also nabbed about 100 Credit Suisse advisors when its Swiss rival shuttered its U.S. wealth management business in 2016.
In a statement, the firm emphasized it is prioritizing things other than headcount. "As we detailed in our Investor Update in 2018, we no longer target a specific FA headcount, but instead focus on advisor productivity. We're proud to say that we continue to have the most productive advisors in the industry. Our advisor recruitment and retention remains closely aligned with our strategic focus on high- and ultrahigh-net-worth clients."
Llike its wirehouse rivals, UBS has experienced attrition due to changing advisor preferences and demographics.
In the past decade, many wirehouse advisors have moved to regional broker-dealers and independent firms in order to gain greater control over their practices and potentially higher payouts. Raymond James, for example, operates both an independent and regional broker-dealer and it has reported consistently rising headcount. At 8,000 advisors, Raymond James currently fields a bigger brokerage force than UBS (the Swiss firm has a larger AUM, however).
“There’s a general movement away from the wirehouses to independence. So if you are not recruiting or training young people, then you’re going to shrink,” says recruiter Bill Willis.
The industry also suffers from a graying workforce where the average age is 52, according to research firm Cerulli Associates. About one-third of all advisors are expected to retire within the next 10 years.
At the same time, advisor training programs at the big firms are smaller than they were pre-financial crisis, according to industry insiders.
To be sure, UBS wealth management business is turning a profit and assets are up. For the first quarter, the firm reported record profit for its Americas wealth management business: $380 million, up 16% year-over-year.
And it’s not the only wirehouse to see its advisor ranks thin out a bit. Wells Fargo’s headcount stood at 13,450 for the first quarter, down approximately 1,500 advisors since the third quarter of 2016 when the firm’s banking scandals first came to light. Morgan Stanley once fielded more than 18,000 advisors following its acquisition of Smith Barney in mid-2009. As of March 31, the firm had just over 15,000, according to company earnings reports.
Still, an aging advisor force and lack of recruiting has some industry observers scratching their heads.
“How do you shrink to grow?” Sarch asks.
Editor's note: This story has been updated with comment from UBS.