UBS Desperate to Keep Clients

According to an article in AdvisorHub, UBS Orders Fee Waivers, Loan Discounts on Reassigned Accounts, UBS is drastically waiving fees and commissions for accounts of brokers who have left the firm, in a desperate attempt to keep those clients, and their assets.

The fee waiver is causing concern for brokers who are planning on leaving, as well as for the brokers who would normally welcome the reassigned accounts, who will now be working for free on those accounts for at least 6 months – with the additional potential liability.

According to the article, UBS is claiming “enhanced protocols” to retain clients, and admits that the firm will contact clients of advisers who leave, notifying them that their advisory fees will be waived for the next two quarters, annual account fees waived for the year and rates on securities-backed and margin loans reduced to a Libor-plus-50 basis points.

This is not unusual, firms use fee waivers to entice clients to stay for years, but what is unusual is a firm making a blanket offer of this size, to all of a departing broker’s clients, without the client requesting same, or deciding to follow the broker.

This “enhanced protocol” follows UBS’ drastic move two years ago when it left the Protocol for Broker Recruiting, throwing broker recruiting back to the early days of lawsuits, injunctions and temporary restraining orders. The Protocol was put in place in large part to avoid the costs of such legal maneuvering. Firms were spending tens of thousands of dollars on legal fees, not to mention manpower, in pursuing injunctions on an expedited time frame, and were losing more of those cases than then were wining. Apparently UBS, and Morgan Stanley, who also left the Protocol, were losing too many brokers and clients, withdrew from the Protocol and started suing departing brokers.

Now UBS is offering these significant fee waivers and margin rate reductions to keep clients, which will undoubtedly be matched by the new firm, which ultimately reduces compensation for the broker.

Merrill Lynch also instituted “enhanced protocols” to retain clients from its departing brokers earlier this year.

One would think these firms would enhance their employee relations and treat their registered reps better, before they decide to leave. 

Securities Attorney at Sallah Astarita & Cox | 212-509-6544 | | Website | + posts

Mark Astarita is a nationally recognized securities attorney, who represents investors, financial professionals and firms in securities litigation, arbitration and regulatory matters, including SEC and FINRA investigations and enforcement proceedings.

He is a partner in the national securities law firm Sallah Astarita & Cox, LLC, and the founder of The Securities Law Home Page -, which was one of the first legal topic sites on the Internet. It went online in 1995 and is updated daily with news, commentary and securities law related links.

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