UBS's head of U.S. wealth
management bullish about growth
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[November 17, 2016]
By Elizabeth Dilts
YORK (Reuters) - For the first time since UBS Group AG bought
PaineWebber 16 years ago, the world's largest wealth manager's U.S.
business has a smaller workforce than an independent rival, Raymond
But does Tom Naratil, president of UBS's Wealth Management Americas,
"No. We don't," Naratil told Reuters on Wednesday. "For six years, we've
said it was all about the productivity of advisers and not the number of
In June, Naratil launched plans to cut the firm's costly recruiting
efforts by 40 percent, streamline broker's compensation and eliminate
some middle management.
The cuts are part of a broader effort to boost lagging revenue. Some of
the money saved from recruiting will go to pay existing advisers bonuses
for growing their business.
It is already working, Naratil said, pointing to the record revenues,
income and pre-tax profit margins reported in the third quarter.
There are costs to leaving the recruiting game amid a decade-long trend
of advisers moving from Wall Street brokerages to independent outfits,
like Raymond James. St. Petersburg, Florida-based Raymond James reported
it had 7,146 advisers across its employee and independent channels in
the third quarter, compared to UBS's 7,087.
"We don't need to wake up every morning and pray for the independent
adviser model to fail in order for us to succeed," said Naratil, who
took on the top job in January.
The cuts, combined with an expected increase in the Federal Reserve's
interest rate in December will help the firm reach its goal of 15-25
percent pre-tax profit margins, Naratil said.
Additionally, the uncertainty for some investors created by the surprise
election of Republican Donald Trump as U.S. president is also good for
business, said the former PaineWebber bond trader.
A UBS survey of 1,200 wealthy investors found that half missed
money-making opportunities because they raised cash or moved into
conservative investments ahead of the election.
"Any kind of uncertainty that people have as a result of geopolitical
events or domestic events is good for the advice markets," said Naratil,
who declined to say whether UBS had been in touch with Trump's
[to top of second column]
Former Swiss bank UBS Chief Financial Officer Tom Naratil attends
the company's second quarter 2011 results news conference in Zurich
July 26, 2011. REUTERS/Christian Hartmann
Naratil also declined to comment on the firm's plans to comply with the
Labor Department's Fiduciary Rule, which is designed to protect
retirement savers by requiring that brokers put their clients' best
interests ahead of their own bottom line. It is set to take effect in
April. Rival firms like Morgan Stanley and Bank of America's Merrill
Lynch announced their plans last month.
It is unclear if Trump will try to delay implementation of the rule.
Regulators have also narrowed in on the securities industry since the
sales scandal at Wells Fargo & Co's retail bank, which opened 2 million
accounts for customers without their knowledge.
Groups like the Financial Industry Regulatory Authority have ordered
brokerages to hand over information about bonuses that brokers can earn
for meeting sales targets.
Naratil said UBS has examined its sales goals and bonuses.
"We don't see anything similar" to what went on at Wells Fargo's retail
bank, Naratil said. "I don't think it is a problem across the wealth
management industry as a whole."
(Reporting By Elizabeth Dilts; Editing by Leslie Adler)
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