From the Reuters report to OnWallStreet on March 28, according to some financial recruiters with knowledge of what UBS offers, the company has offered up to 215 percent of a broker’s annual trailing revenue production upfront. (Rivals offer between 160 percent and 195 percent.)
These aggressive recruiting packages at UBS include performance target bonuses bringing packages to a total of up to 350 percent of a broker’s annual trailing production…75 percentage points higher than what they offered a year ago, according to an industry lawyer in the report.
In return for these deals, broker contracts are longer – up to 9 years and if they leave earlier, they pay some of the money back.
These large payouts have sent UBS’s cost-to-income ratio to 90% for its U.S. brokerage compared to 65% for its global wealth management unit.[pullquote]If you don’t hire the top producers, somebody else will.[/pullquote]
“This will affect their operating income and profitability ratios for certain and it’s an expensive growth strategy. They’ll be spending less to grow in other areas including technology”, according to industry observers cited in the report…but then, “If you don’t hire the top producers, somebody else will.”