UBS is making collecting deferred compensation easier for certain employees who decide to leave the bank, but not for financial advisors in its Americas unit, according to news reports.
UBS employees leaving the industry entirely starting this fourth quarter will able to collect their deferred comp immediately, in a bid to give them more flexibility as the Covid-19 crisis has led many to reconsider their careers, Bloomberg reports, citing chief financial officer Kirt Gardner’s comments on a third-quarter earnings call with analysts and journalists yesterday.
“This is not about managing under-performers,” UBS CEO Sergio Ermotti said during the same call, according to the news service. “We realized during the Covid crisis across the board — and it’s not just managing directors — people are thinking about re-prioritizing their life.”
UBS set aside $359 million in the third quarter for departing employees, with $229 million provisioned for those leaving the investment bank unit, Bloomberg writes.
The change of policy on deferred compensation doesn’t cover executive management personnel nor financial advisors in the Americas business, however, according to the news service.
Deferred compensation has been an area of contention among advisors and wealth management practices. UBS was slapped with a lawsuit in November 2019 brought by a broker who claims that he only received $20,000 of the $240,000 in his deferred compensation package after leaving in 2018.
Former Credit Suisse brokers, meanwhile, have filed dozens of claims over deferred compensation, following the firm’s decision to exit the U.S. wealth management business in 2015 and an agreement with Wells Fargo to take its U.S.-based financial advisors.
And in January 2020, Wells Fargo reached a $79 million settlement over its deferred compensation policy, with up to 1,400 former advisors who could potentially be eligible.
Advisor ranks at UBS’s Americas unit, meanwhile, have been shrinking. The unit ended the third quarter with 6,353 advisors, compared to 6,410 it had at the end of the second quarter and 6,627 in the third quarter of 2019.
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