UBS’s Ham-Handed and Under-Handed Non-Solicitation Reality

It’s been a corporate culture rollercoaster at UBS the last two weeks.

UBS now requires advisors to sign a 12-month non-solicitation provision to receive bonuses.

UBS characterizes how they handled their new client non-solicitation strategy rollout as “Ham Handed.” It certainly was. The more significant concern, however, isn’t the ham-handed way UBS implemented the policy, it is the underhanded way UBS is now attaching non-solicitation provisions to all current and future advisor bonuses.

While UBS and Morgan Stanley are both non-protocol firms, it’s Morgan Stanley who has non-solicitation teeth in their agreements. Morgan Stanley followed UBS into non-protocol, and now UBS is following Morgan Stanley in non-protocol enforcement through broader non-solicitation provisions.

Morgan Stanley’s non-solicitation provisions can be beaten through modern announcement strategies, but most (not all) UBS non-solicitation provisions can be “beat” by just paying back any loan note balances. This has put UBS in a position of being a non-protocol firm without the same non-protocol legal technicalities that allow for the litigation fear tactics Morgan Stanley now employs against their advisors.

We have spoken with dozens of UBS advisors over the last couple of weeks and have seen emotions range from initial shock to anger, to disappointed resignation that UBS isn’t so different from Morgan Stanley after all.

The recent key events that unfolded at UBS:

• UBS implements restrictive client non-solicitation policies to be attached to advisor’s annual bonuses.
• The provision lasts for 12 months, and if advisor leaves for another firm during that year, then they are subject to a 12-month client and employee non-solicitation period.
• UBS then sneaks in non-solicitation provision into 2017 bonus agreements. They slipped it in and didn’t bring attention to it as if it were going to go unnoticed.
• UBS advisors went ballistic.
• UBS execs “apologized” in the way they bungled the handling of the new non-solicit rollout.
• The retroactive non-solicitation provision for 2017 was rolled back.
• UBS tells their advisors they will add measures to ensure drastic changes wouldn’t be made to their compensation after the non-solicitation provision is signed.
• UBS conveys while they messed up on the initial rollout, the new policy is here to stay and 2018 bonuses earned will require the non-solicitation provision for bonuses to be distributed in 2019.

The clear message and bottom line to UBS advisors:

• UBS doesn’t just want advisors to pay their debts when they leave; they want their clients as well.
• Any bonuses earned this year will have a 12-month client non-solicitation attached to it when distributed next year.
• UBS advisors that get bonuses every year will stay in a continual 12-month non-solicitation period.
• By not signing the non-solicitation provision the UBS advisor takes another pay cut from not being able to receive bonuses earned.
• While UBS is using more smoke and mirrors than Morgan Stanley, the end goal is the same: retention through the threat of litigation.

The UBS non-solicitation provision wasn’t a trial balloon that was successfully rebuffed by advisor outcry. The only “victory” UBS advisors gained was a reprieve from the retroactive implementation of bonuses earned last year. Any bonuses earned this year, and years following, will require the non-solicitation provision to be signed for advisors to receive their earned bonuses.

If you’re a UBS advisor who is not willing to trade the ability to solicit clients if you leave for bonus payments you receive, we invite you to give us a call to confidentially discuss and compare your options. From all of the direct and plug-in independent models to non-wirehouse traditional models, you’ve never had more opportunities to choose from. We’re advisor advocates, have an “open architecture of options,” and can help you maximize the deal from the top-tier firms, models and platform providers.