Job Search 2004

August 30, 2004
UBS Aims to Draw U.S. AssetsWith Acquisition, Top Brokers
By JED HOROWITZ DOW JONES NEWSWIRESAugust 30, 2004; Page C3
Mark Sutton aims to rustle up some wealthy Americans.
His employer, banking giant UBS AG of Switzerland, is after new customers and is even scouting for an acquisition, such as a trust bank, to help it capture the assets of the very wealthy. The firm also wants to lure brokers who cater to the rich.
It means a big job for Mr. Sutton, 49 years old, chairman and chief executive of UBS Wealth Management USA, the former PaineWebber. And it will be something of a lonesome trail for the native Texan after his younger brother, Randall, a broker, this month quit UBS to join the West Houston, Texas, branch of RBC Dain Rauscher, a brokerage unit in Minneapolis of Royal Bank of Canada.
"He said he needed his own identity," says Mr. Sutton, 49 years old.
Separately, UBS's U.S. profile will climb another notch when the firm acquires Charles Schwab Corp.'s capital-markets operation in a deal expected to be announced today.
Mr. Sutton says he is making progress in transforming the stock jockeys of PaineWebber into trusted financial advisers and wealth managers who use their Swiss parent's balance sheet to gather assets. But he concedes that nabbing top brokers isn't easy.
"The demand for successful advisers is going to continue to go up, because it's hard to get client assets and every firm in this business wants them," he says. Mr. Sutton spoke last week in the New York office of PaineWebber, which UBS bought in late 2000 for about $10.8 billion. "Everyone needs to grow their market share, everyone has excess capacity, and advisers are often reluctant to move because it's hard to move assets with them."
As such, UBS and many of its rivals are upping the ante, offering signing bonuses equal to 100% of the revenue a broker produced in the previous 12 months, with opportunities to increase those six- and seven-figure numbers at various measuring points during the next four years. "They can earn very attractive packages," Mr. Sutton says.
UBS and some rivals also cover deferred pay that top brokers leave behind if they meet certain asset-gathering criteria after they arrive at their new employer. The lures come as UBS has lost 1,600 brokers since the end of 2002, which Mr. Sutton says reflects higher standards and the temporary shuttering of a training program that UBS revamped last year to teach brokers how to use and communicate their new parent's strength.
Rivals also shed brokers in recent down markets, but UBS's 7,360-strong force is only a little more than half of what Merrill Lynch & Co. employs, while Citigroup Inc.'s Smith Barney has roughly 12,000 brokers and Wachovia Corp.'s Wachovia Securities and Morgan Stanley each have about 10,000.
Mr. Sutton aims to replenish the UBS ranks to above 8,000 within two years and 10,000 within five years. He says brokers will come if they can be persuaded of the Swiss bank's allure to wealthy investors. "We're a different firm than we were before," says Mr. Sutton, who interrupted his long PaineWebber career with a three-year hiatus at the now defunct Kidder Peabody in the early 1990s.
While marketing experts advised against dropping the PaineWebber name, Mr. Sutton says the "global panache" of UBS is proving itself through increased market share and a broad range of products.
For the first time since the 2000 merger, Mr. Sutton says, UBS brokers this year have outranked their peers in productivity, averaging $266,700 in fees, commissions and other revenue per broker. Spokesmen at Merrill and Smith Barney say that on an annualized basis and using different rubrics for products and types of brokers, their numbers are higher.
The firm now ranks behind Merrill and Smith Barney with a 15% revenue share of the U.S. retail market among the top six full-service brokers, up from 13% in 2000, according to UBS. Aiding the growth: Brokers now can sell mortgages, loans and derivatives at alluring rates because of the parent's top-tier credit rating. UBS's fastest-growing area is advising clients for a fee on managing their money among different advisers and products. (UBS doesn't pay brokers extra for pushing its own asset-management unit or products.)
To quickly expand assets, Mr. Sutton recently recruited a pair of executives from Merrill to build programs and hire brokers who focus on "ultra high net worth" investors, with $10 million or more of investable assets.
Mr. Sutton also says he would consider buying another brokerage house -- though there are few candidates -- or, more likely, a trust bank.
Write to Jed Horowitz at jed.horowitz@dowjones.com1
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