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Is UBS recruiting headed in a new direction?

UBS’ hiring spree over the past few months seems to signal a decided redirect in its hiring philosophy — and perhaps a testing of the waters of a new recruiting approach at the firm.

In a dramatic shift, over a scant two-day period this summer, UBS doubled down on major hires of Merrill Lynch brokers, securing the team of James Patrick and John D'Amico who managed $440 million in Merrill assets in Mill Valley, California, and hiring 20-year legacy Merrill broker Michele McCallion, who managed $391 million in assets from New York. This hiring spree seemed out of step with the firm's previous strategy as espoused by CFO Kirt Gardner, who notably emphasized improved asset flows as the key financial stabilizer to the UBS playbook in statements he made in July of this year.

But in speaking with several UBS branch managers over the last six months, it seemed to me that upper management at UBS was starting to see the error of their ways when it came to pulling back on recruiting. Taking into account scalability of revenue and client assets of large firms, the most efficient and successful means of achieving increased revenue and asset growth goals is through a decided focus on recruiting and hiring teams with client assets of $150 million to $200 million or more, as opposed to the incremental gains achieved by attempting to secure more assets from existing or new clients.

UBS said it wants to bring more transparency to philanthropy and use investment capital to lower the risk that nonprofits take on in running programs - freeing up their resources to pursue even more projects.
Employees pass between offices as UBS Group AG logo sits on a walkway at the UBS headquarters in Zurich, Switzerland, on Monday, Jan. 22, 2018. Photographer: Stefan Wermuth/Bloomberg

The first notable change toward a greater emphasis on recruiting philosophy could be seen in the recruiting conversions among the branches and managers and their pipeline reporting — a process which typically signals management is focusing on recruiting as part of their strategic business plan. This was followed by, in rapid succession, a number of highly publicized advisor and team hires in recent months by UBS — moves that were incongruous with UBS' previous strategy of not announcing hiring activities. In the past, UBS did not publish their hires. Now its goal seems to be the exact opposite: the attention is wanted and the messaging is clear — “We're back!”

Of course, the elephant in the room when it comes to UBS will continue to be the protocol or no protocol factor. UBS’ exit from the protocol in December 2017 was intended to stem the loss of advisors to competitors.

Unfortunately for UBS, however, the decision to leave the protocol had the exact opposite effect on some of its advisors. Earlier this month, for example, it was reported that Raymond James hired a $4 million UBS team out of Birmingham, Michigan. Some advisors have perceived the protocol exit as a leveraged move to force advisors — and the client assets they managed — to stay with the firm. Ultimately, however, a talented advisor with the right motivations for their business and clients cannot be “forced” to do anything — a lesson UBS management is slowly coming to learn.

Which begs the question: if UBS is still losing advisors to protocol firms while simultaneously trying to selectively recruit teams away from those same protocol firms, then why stay out of protocol? Being a non-protocol firm puts UBS at a decided disadvantage as it gives its competitors a talking point when it comes to reasons not to join the firm.

Since UBS is, in my opinion, one of the best wirehouse firms available to advisors in the financial services industry today, the UBS the strategic redirect should be to go back into protocol, continue with what appears to be their new selective recruiting and hiring strategy, and provide a simultaneously unique and profitable transition deal to those they hire.

If UBS takes that approach, I foresee a future for the firm where a notable difference in net new asset flows from client, which will lead to increased revenue achieved.

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