UBS softens its 2024 advisor pay overhaul for the second year running

Grid creep is the shared problem, and the two wirehouses with 2027 plans on the table are handling it in opposite directions. Morgan Stanley raised by 10% across the board the revenue thresholds an advisor must cross to reach a higher payout rate ^[7]. That takes payout back from asset appreciation. Grid creep is exactly that: invested assets rise, take-home pay rises with them, and nobody had to bring in a new client ^[8]. UBS left its thresholds alone and paid more for things an advisor has to go and get, namely net new money, new clients and returns on invested assets ^[3][4].

The award side of that choice lands in a cost line UBS has been pulling down. The Americas unit's cost-to-income ratio fell to 84.1% in the second quarter from 87.4% in the first ^[15], 3.3 points in three months ^[4]. Ermotti said the improvement came from the wealth unit "executing on four or five levers" ^[16].

The retention record is checkable because UBS is the only wirehouse still publishing quarterly advisor counts, and that count has fallen steadily for two years ^[13]. In July it reported 5,644 advisors in the Americas, down 80 on the quarter ^[14]. That is 1.4% of the 5,724 it had three months earlier ^[2], and four quarters at the same pace would take out about 320 advisors, or 5.6% ^[3].

UBS is not buying its way out with hiring packages. "We try to really balance staying competitive in the recruiting space without doing deals that are quite value disruptive," Ermotti said on Tuesday at the Bank of America 31st Annual Financials CEO Conference in London ^[18]. At the same conference he said the firm has "a healthy recruiting pipeline" ^[17]. The extra money in the 2027 plan goes to people already on the books.

Lisa Golia, head of the field for UBS's Global Wealth Management unit, wrote in a memo that the policies are meant to be predictable and to avoid "significant or unexpected changes" ^[9]. "With that in mind, we've kept changes to a minimum and prioritized stability and consistency," Golia wrote ^[10].

Not every line is additive. UBS won approval for a U.S. banking charter in March, which makes it easier for advisors to sell checking, savings and payment services ^[20]. The 2027 plan stops counting money held in those accounts toward the awards for good returns on client assets ^[6]. Andrew Tasnady, founder of Tasnady & Associates, said the plan lacks the usual mix of good and bad news: "It sounds like it's just all pluses," he said ^[11].

I think the awards are the cheap lever aimed at the wrong population. Bonuses for net new money and new clients pay most to advisors who are already growing, while the late-2024 grid that pressed low producers to raise revenue stays in place ^[2][4]. Tasnady's reading is the counter, and it is a fair one: with no negative grid change, an advisor has one less reason to take a recruiter's call ^[11]. If the Americas headcount flattens over the next two quarters without the grid moving, the award-only approach was enough and I was wrong. One point of caution on the framing: the gap Ermotti undertook to keep narrowing was with "our peers" ^[19], and the remarks as reported do not identify it as a pay gap.