UBS Non-Solicitation U-Turn

UBS leadership has made a U-turn in the non-solicitation direction they initiated in February. While the reversal is a big disappointment for the recruiters and firms who have been salivating for months over the pending recruiting boom, it’s been a good move for the UBS advisors and their clients.

Currently, most UBS advisors are under an employment agreement, with a non-solicitation provision that is enforced if the departed advisor has an outstanding and unpaid note to UBS. If the advisor pays off any and all note balances when they leave, they are not bound by the non-solicitation provision.

Earlier this year, UBS tried to sneak in a bolstered, retroactive non-solicitation provision attached to the annual bonus advisors were receiving for 2017. The new provision was structured with a 12-month client non-solicitation attached to advisor bonuses. The provision could not be eliminated even if the bonus was paid back. This placed UBS advisors receiving bonuses each year in a perpetual 12-month non-solicitation period.

UBS advisors, understandably, went ballistic. UBS backed off from the retroactive stance but affirmed that the new non-solicitation provision would stay in force for the bonuses earned in 2018.

Bruce Kelly, with InvestmentNews, reported in September that UBS was backing away from the new non-solicitation language tied to bonuses. Last week, UBS issued a memo to their advisors that they officially reversed course, for now.

Brian Hull, the Head of Wealth Management USA stated in the memo, “We listened and, based on advisors’ feedback, we rolled back the changes.”

We spoke with many long-tenured, elite production level UBS advisors who told us they simply refused to believe that UBS would actually go through with this in the end.

They were right.

Mr. Hull continued in the memo, “As a leadership team, we strive for openness, for always listening to feedback and for taking action to better serve the needs of our clients, our employees and our shareholders — and that includes changing course when necessary.”

Kudos to UBS leadership for taking a U-turn when they realized they were on the wrong course.