UBS advisors finally get "retained"....still no WF.

By Matt Townsend

Dec. 10 (Bloomberg) -- UBS AG, Switzerland’s largest bank, will award bonuses to veteran financial advisers in the lender’s Americas wealth-management unit as it tries to retain brokers, according to a financial recruiter.

Advisers at the firm at least five years and with more than $500,000 in revenue next year are eligible for a year-end bonus of 65 percent of their prospective production in 2011, according to Mindy Diamond, president of Chester, New Jersey-based Diamond Consultants LLC, who said she spoke with UBS advisers. The bonus would be in the form of a loan that would be forgiven if the employee stays with the firm for seven years, she said.

The Zurich-based lender hired Robert McCann, the former president of global wealth management of Merrill Lynch & Co., in October as head of wealth management in the Americas to revive a business unit that posted a 41 percent drop in earnings in the third quarter.

“It’s a noble sentiment,” Diamond said. “They’ve recognized they need to do something to stave off attrition, but it’s a little too little, too late.”

Brand-name brokerages are under pressure to retain and attract financial advisers following upheaval in the industry as the global credit crisis caused brokers to move to independent and smaller firms.

Morgan Stanley Smith Barney and Bank of America Corp.’s Merrill Lynch wealth-management unit both responded by offering as much as 330 percent of a broker’s revenue in the past year to switch firms. UBS hasn’t announced a new recruiting deal since McCann’s arrival.

‘Perfect Storm’

“It’s the perfect storm for people to move,” Diamond said. “If you can get 330 percent from Morgan Stanley and you are only being paid 65 percent and you have to wait 13 months to get it with UBS and still take seven years to vest, why would you stay?”

“This new paradigm for compensation is aligned with our renewal efforts and our vision of becoming the best wealth- management firm in the Americas,” UBS said in response to an e- mail message seeking comment.

The Financial Times reported the UBS plan earlier today on its Web site.

Investors at UBS’s wealth-management units withdrew a net 26.6 billion francs ($25.9 billion) in the third quarter, up from 23.3 billion francs in the second quarter, after UBS agreed in August to disclose information on accounts to settle a U.S. lawsuit related to tax evasion.

UBS amassed more than $50 billion in writedowns and losses during the financial crisis, the most of any European bank, and had to turn to the Swiss government a year ago for a 6 billion- franc injection. The bank last year reported a net loss of 21.3 billion francs, a record in Swiss corporate history.

To contact the reporter on this story: Matt Townsend in New York at mtownsend9@bloomberg.net