UBS Wealth Americas’ Profit Plummets, Broker Roster Shrinks

UBS Wealth Management Americas’ profits tumbled 72% in the last three months of the year and its advisor roster also contracted in a challenging quarter for the Swiss bank-owned wirehouse. 

UBS’s Americas unit, which includes brokers in the U.S., Latin America and Canada, generated $102 million in profit in the fourth quarter compared to $375 million in the prior year. Its margins shrank to mid-single digits as revenue dropped and the firm set aside $60 million to pay a special assessment from the Federal Deposit Insurance Corporation tied to the regional banking crisis. 

UBS executives acknowledged the dim results but promised no quick fixes aside from a return to low double-digit margins without the impact from the FDIC payment. 

“We expect [pre-tax profit] margins in the US to remain in the low double digits in the near term, but we are confident that the actions we take will help produce mid-teens profit margins by the end of 2026,” CEO Sergio P. Ermotti told analysts on the company’s earnings call. 

UBS measures its profitability through a cost-to-income ratio, which increased last quarter to 96.1% from 85.9% and translates into a profit margin of under 5%. 

UBS, which has around half as many advisors as its wirehouse rivals in the U.S., has long lagged the mid-20% profit margins of those competitors. Ermotti said that once it stabilizes margins, it will then “explore opportunities to further narrow the gap to our peers.” 

In the near term, Ermotti said the Americas wealth unit will make gains by shuffling its international clients to its U.S. advisors and products. It would also make “investments in infrastructure” to “augment the user experience and improve productivity.”

Adding to its to-do list, UBS Chief Financial Officer Todd Tuckner said it would take a page from its global wealth operations, which operate more like a private bank in selling ultra-wealthy customers on more than investments. Tuckner pointed specifically to directing customers to its investment bank and selling loans, which he said “institutionalizes clients” and makes them “stickier.”

That “sort of good blocking and tackling should support the profit margin in mid-teens over the next two to three years,” Tuckner added. His comments came in response to multiple analyst questions about the U.S. margins, which as one said are “still significantly below what your U.S. peers are doing.” 

UBS has taken measures in the past two years to tighten expenses at the U.S. wealth unit, including slashing its field leadership ranks, laying off client associates and telling managers to trim expense budgets. Notably, it has kept its foot on the gas in terms of recruiting, which has helped to bolster its net new assets. 

In a sign that it continues to spend on hiring, UBS reported $1.754 billion in recruiting loans outstanding, nearly flat year-over-year. 

UBS reeled in $13.4 billion in net new assets the quarter, although it changed its calculation for the first time to include dividends and interest payments. Excluding dividends and interest, it brought in $300 million in the third quarter and reported outflows in prior quarters last year. 

UBS’s Americas advisor roster also contracted 2% year-over-year to 6,117 at the end of 2023 despite its aggressive recruiting in the U.S. While the majority of those brokers are in the U.S.,  that number may have been affected by fluctuations in Latin America as UBS integrated Credit Suisse brokers. 

UBS Americas brokers managed a combined $1.89 trillion in client assets, up 19% year-over-year. Loans in the Americas shrank 2% sequentially to $97.3 billion, corresponding with a $3.2 billion in net new loan outflows, the company said.