Breaking with tradition, UBS is unveiling its 2026 U.S. advisor compensation policies earlier than usual, hoping to stem further advisor defections and boost incentives to work with ultrawealthy clients.
The changes range from increasing the payout ratios for advisors producing between $1 million to $3 million in annual revenue and to rewarding those who bring in clients with $10 million or more in assets. Updates also include making it easier for junior team members to share in growth incentives and increasing the limits for claimable business expenses, according to sources familiar with the firm’s pay policies. In general, the changes are meant to reward loyalty to the firm amid a recent stream of defections to industry rivals, while also giving advisors a push to move up the revenue-production scale.
Of the major wireshouses, which also include Morgan Stanley, Merrill and Wells Fargo, UBS’ U.S. wealth management unit is usually the last to announce changes to its advisor pay policies. Its first-out-of-the-gate release this year comes amid an acceleration of advisor departures following the firm’s announcement last year of changes largely aimed at lowering payouts for brokers at the lower end of the production scale.
READ MORE:
“This year’s plan is a direct outcome of a truly collaborative and constructive dialogue with Advisors and Field Leaders and is designed to provide transparency and simplicity, as well as support the future growth and development of your businesses, our clients and our firm,” stated a memo UBS circulated to advisors Tuesday. “Every change we’ve made to the plan is designed to result in positive outcomes for Advisors, align with our strategy of helping you successfully grow your business, and ensure that we remain among the most competitive in the industry.
Increase for $1M to $3M producers and 60% payout for ultrahigh producers
According to sources familiar with UBS’s pay policies, the changes being made to the firm’s basic grid include:
- Increasing the payouts for $1 million to $3 million producers by half a percent.
UBS advisors generating $1 million now receive a 49% payout rate and will go from making $490,000 to $495,000 next year under the new plan.Advisors generating $2 million now receive a 51% payout rate and will go from making $1.02 million to $1.03 million next year. - For advisors producing between $3 million and $4 million a year, providing a 1% bump in the amounts they are paid in upfront monthly installments. Like most large wealth managers, UBS provides some pay quickly after it’s earned and then holds some back in the form of deferred compensation to reward advisors who stay with the firm for a set number of years. The percentage of upfront cash-to-deferred comp for advisors in the $3 million-to-$4 million bracket is going up from 85% to 86%. That will bring it in line with payout ratios for advisors in other tiers.
- Adding a special 60% compensation rate for advisors or teams producing $20 million or more a year. Sources familiar with the matter said it will be the highest payout percentage in the industry. Unlike many other compensation rates in wealth management, this one doesn’t depend on recipients’ length of industry experience.
Changes to growth incentives
UBS already provides advisors with various incentives for bringing in net new assets to manage, for securing higher returns on assets already under management and for bringing in clients with $1 million or more in assets. It’s adding to those incentives by:
- Providing advisors with additional rewards for bringing in clients with $10 million or more or assets. This sets the firm’s priorities even more on working with high net worth and ultrahigh net worth investors, a long-standing market for UBS and its predecessor U.S. brokerage PaineWebber, which UBS acquired in 2000.
- Moving away from a system that awarded incentives only if individual advisors hit the firm’s growth goals and instead allowing teams of advisors to claim the rewards if they meet the same criteria. What’s more, UBS will allow a team of advisors to receive whichever of the two is highest: the incentives on offer from an individual’s reaching the goals or from the team doing the same. Sources familiar with the new pay policies say that the current system tends to reward senior advisors, and the goal now is to be more inclusive of junior team members.
- Giving junior advisors on teams more time to reach a production threshold that allows them to receive their maximum possible payout rate. Advisors are now paid a share of whatever the highest-producing member of their team generates. But to receive that payout rate, they themselves need to be generating at least $750,000 a year for the firm by their fifth year of employment. The changes next year would give them until their 10th year to hit that goal.
Strategic alignment
Like many firms that have wealth management arms tied to large banks, UBS encourages its advisors to move investors into banking products and services. Such “cross-selling” not only provides additional revenue but also makes it harder for clients with so many accounts and relationships to leave for other institutions.
Also like other wealth managers, UBS places priority on advisory accounts that generate fees on assets under management over traditional brokerage accounts, which rely much more on commissions collected from sales of individual investment products. Advisory accounts are generally prized for their ability to generate steady streams of revenue.
With both goals in mind, UBS’ changes for next year include:
- Increasing the payouts advisors receive for moving clients into savings accounts. They now receive 0.05% of assets held in those accounts. That will go up to 0.1% (10 basis points.)
- Allowing advisors who move clients over to advisory accounts to receive compensation for fees generated by mutual funds those clients may have. UBS decided this year to end advisors’ ability to receive credit for trailing commissions on sales of mutual funds to clients. Trailing commissions are fees investors pay every year they own a particular investment such as a mutual fund or insurance product. The change next year will allow advisors to receive compensation, at no additional cost to clients, for any income they may be giving up by moving mutual funds and similar investments into advisory accounts. The offer will last for a year.
Increased allowances for business expenses
UBS limits advisors’ ability to claim business expenses according to how much revenue they do for the firm. The lowest producers are now allowed to claim as much as $3,500 a year and top producers as much as $10,000. Those limits will be increased to $5,000 and $17,500, respectively, next year.
Current comp policies led to increased advisor attrition
UBS announced changes to 2025 advisor pay
The firm also eliminated a payment system called the Combined Team Grid, which had allowed wealth managers on advisory teams to be paid out a percentage of the group’s total production. Its replacement was a Highest Producer Grid, which allows advisors on a team to receive payouts only as a percentage of the revenue generated by the highest-producing member.
UBS executives have acknowledged the changes would probably drive some advisors to leave. Discussing earnings in February, Chief Financial Officer Todd said “our efforts to align financial advisor incentives with our strategic priorities may result in a short-term increase in [financial advisor] attrition, creating an additional headwind for net new assets in the coming months.”
UBS has indeed suffered big departures. This summer it
RBC Wealth Management has also been a magnet for departing UBS advisors. Its recruited teams include:
Advisory teams have also left UBS in recent months for
(This story will be updated.)
#UBS #releases #advisor #comp #policies