UBS is revising financial advisor compensation as part of its 2025 strategy, aiming to balance short-term advisor retention risks with long-term profitability in its U.S. wealth management division.
Advisors managing smaller accounts and generating less revenue will feel the greatest impact. However, UBS has introduced a revised bonus structure to help offset the cuts, providing advisors new incentive opportunities.
The firm’s compensation structure relies on a payout grid—a percentage of revenue advisors generate determines their earnings. Advisors advance through 10 revenue brackets, earning payouts ranging from 28% for lower producers to 60% for top performers. The 2025 plan reduces payouts by two to four percentage points for advisors generating under $750,000 annually.
“This plan aligns with our U.S. growth and profitability goals, rewards advisors for growth and tenure, and maintains our position as a leader in competitive compensation packages,” a UBS representative stated.
The structure of the grid remains consistent, and tenured advisors retain opportunities for higher payouts. UBS opted against raising revenue thresholds for each bracket, a strategy other firms have used, to avoid uniformly impacting all advisors.
“Cutting payouts allows targeted changes, whereas raising thresholds affects everyone equally,” notes Andy Tasnady, compensation consultant at Tasnady & Associates.
A notable change eliminates the special team-based payout introduced in 2017. Previously, teams could earn based on combined revenue. Now, compensation will reflect the highest-producing advisor within the team. While this impacts smaller-producing teams negatively, it leaves others largely unaffected—approximately 70% of UBS advisors operate within teams.
AdvisorHub first reported UBS’ 2025 compensation revisions, which mirror industry-wide trends to align incentives with strategic priorities. For example, Morgan Stanley plans to reward cross-unit client referrals in 2025, while Wells Fargo reduces payouts for smaller accounts to focus on higher-net-worth clients. UBS’ changes are less sweeping compared to past adjustments.
The new structure’s significance varies by advisor, depending on business performance and market conditions. Most advisors operate fee-based models, potentially benefiting from higher market valuations, with the S&P 500 climbing 27% this year. “Rising markets lift all boats,” says Tasnady, though the impact of compensation cuts will differ across advisors.
To counterbalance the cuts, UBS enhanced its client growth bonus, offering eligible advisors up to 4.5% of compensable production, according to insiders. This bonus creates an avenue for advisors to mitigate the effects of reduced payouts.
Even with incentives, some advisors may see smaller paychecks in 2025. This could prompt lower-producing advisors to explore opportunities with competitors. “With any comp plan changes, there are winners and losers,” says Louis Diamond, president of Diamond Consultants. “For many, the best-case scenario is minimal impact.”
UBS remains the smallest of the four wirehouses, which include Merrill Lynch, Morgan Stanley, and Wells Fargo. Advisor headcount has declined since the financial crisis, partly due to branch sales, retirements, and advisors leaving for competitors or independence. At the end of Q3 2014, UBS reported 7,114 advisors in its Wealth Management Americas unit. Today, it reports 5,986 advisors, including staff in Canada and Latin America. Leadership focuses on quality over quantity but acknowledges the need for scale.
The U.S. wealth market, a profitable arena, remains a strategic priority. UBS oversees over $2 trillion in U.S. wealth management assets and employs many top-performing advisors. Still, it faces challenges, including digesting its Credit Suisse acquisition and improving profitability.
UBS is targeting a U.S. wealth management pre-tax profit margin increase from roughly 10% to the mid-teens, according to UBS Group CFO Todd Tuckner at a recent financial services conference. For context, Morgan Stanley’s wealth division achieved a 28.3% margin in Q3 2023. Tuckner emphasized the potential for growth but noted work is needed to achieve profitability goals.
New leadership, including Rob Karofsky as president of UBS Americas, is refining the U.S. wealth strategy. UBS plans to present updates in early 2025. “We’re evolving the strategy and working closely with leadership to ensure alignment with profitability goals,” Tuckner said.
UBS may accept short-term attrition among lower-producing advisors to prioritize building a larger, more profitable U.S. wealth management business. The bank’s moves underscore its commitment to a strategy that balances growth, competitiveness, and long-term profitability in an evolving industry landscape.
