Over the weekend it was discovered that UBS leadership has been considering potential merger partners, and Credit Suisse was specifically named. A like-minded Swiss firm that has already divested its US wealth management operations several years ago. The report claimed that the talks have been exploratory in nature and nothing is imminent or definitive, but this news begs a whole lot of questions.
What to make of it with respect to UBS advisors here in the US? How would a merger, of any kind, potentially affect advisors and teams that have continued to remain loyal to the UBS brand? Speculation could take this conversation anywhere, so let’s take some of UBS’ recent moves and put them in the context of a potential Swiss mega-merger.
First, there has been a tremendous amount of ‘cost-saving’ window dressing in the past couple of years at UBS (both here in the US and globally). A protocol exit was accompanied by a significant drawdown in recruiting bonus balances that sat on UBS’ balance sheet. The decision to exit the protocol meant that UBS was more comfortable litigating any move away from the firm as opposed to competing in earnest on the recruiting field of play.
Second, UBS has been furiously recruiting private bankers from Goldman Sachs, Alliance Bernstein, and even J.P. Morgan. They’ve pulled more recruits from the banking ranks than other channels so far in 2020. This is telling when you put in the context of creating a potential Swiss banking monolith that would be UBS + Credit Suisse. Where is the wealth management compensation model headed, longer-term, at UBS? If you pan out the writing seems to be on the wall.
Third, UBS is about to implement the announced comp grid changes that increase hurdles by 20% across the board to earn the same level of comp advisors have earned in the past. In other words, increasing unit profitability as the firm ‘explores potential strategies’ that could find itself either executing a mega-merger or selling different pieces of itself to meaningfully push up its value i.e. stock price (which many of you know hasn’t moved in a meaningful way in years).
The report itself comes from Bloomberg news, here is what they reported:
“UBS Group AG Chairman Axel Weber has been studying the feasibility of a mega-merger with rival Credit Suisse Group AG as part of a regular thought-exercise on future strategic options, according to people familiar with the matter.”
“UBS, the world’s largest wealth manager, has been exploring the question with consultants but it hasn’t raised the topic at the level of the executive board, the people said. The assessment is part of regular internal planning procedures and there are currently no formal discussions going on between the two banks, said the people, who asked for anonymity because the information isn’t public.”
“Both banks declined to comment. Speculation about a deal was stoked earlier Monday when Swiss finance blog Inside Paradeplatz wrote that Weber and Credit Suisse’s chairman Urs Rohner could agree on a merger as early as next year. Both banks declined to comment on the report.”Bottom line, where there is smoke there is always fire. If it isn’t a Credit Suisse merger, something else is afoot. More change is coming to UBS and it will trickle down to advisors that are employed by the firm. It will be quite interesting to see if this type of news furthers the current trend of larger teams leaving UBS for greener (and more stable) pastures.
Rockefeller continues its dominating ways at the top end of the wealth management recruiting arena. Since Greg Fleming’s arrival over two years ago, the exclusive wealth management company has set their sights on wirehouse teams that claim to have better than a half-billion in assets under management. Fleming has added 84 teams so far, 23 this year alone, with very competitive economic packages.
Today, Rockefeller announced the arrival of Marie and Shawn Moore. The $5M team ranked #42 on Forbes’ list of top women advisors and in Texas, ranked #1 with almost $500M in AUM. According to FINRA’S BrokerCheck, Marie was a Morgan Stanely lifer includes predecessor firms like Lehman Brothers and Smith Barney.
Last week, Rockefeller has added more than $2B+ in client assets spread across three different teams. Two from UBS and one from Merrill Lynch.
Bob Fink and John McMahon made the move with a $1B in client assets under management and better than $5M in annual revenue. Bob, started with Merrill in 1996 and ranked #44 on Forbes’ list of the top northern California wealth advisors. Both he and McMahon has been registered with Merrill for 39 years without a single customer complaint or negatives mark as shown by their BrokerCheck records. The team will be a part of Rockefeller’s northwest division, and work under by Brian Riley, who was also a former Merrill Lynch private wealth manager.
From UBS joined Jason Zilveti in Scottsdale, AZ with $2M in annual revenue and $400M in client assets. As well as Francis Amsler and Marc Laborde in Houston, TX adding $800M in client assets under management and another $4M in annual revenue. They make up the third private wealth group in the Houston branch.
To say Rockefeller is on a role doesn’t quite get it done. Right now, they are the wealth management ‘belle of the ball’ and everyone wants a dance.
There has been an ever-growing stream of Bernstein advisors that have left the firm over the past year. And that stream has seemed to pick up speed as 2019 turned into 2020. Generally, a movement that finds advisors exiting a firm like Bernstein finds its way to one, maybe two competitors at best; but that hasn’t been the case here. Bernstein advisors have exited to RBC, First Republic, Wells Fargo, Stifel, Morgan Stanley, and others.
So why has the exodus from Bernstein accelerated and seems to be doing so again?
Beyond the different ways that competing firms have become comfortable with taking on the Bernstein advisor and their model, and paying them huge bonuses to do so, it comes down to payout. Yes, simple comp grid mathematics is moving the needle in a huge way.
To elaborate it out a bit further, the largest advisors and teams at Bernstein are topping out at 22-23% on the firm’s grid. A team generating $5M in annual production is getting a net somewhere around $1.1M – $1.25M in W-2 compensation. Fully half of what a Morgan Stanley, UBS, or Wells Fargo team would receive – to say nothing of even more generous payout options at places like RBC (albeit just a few basis points higher than the wires).
That kind of blatant disregard for what should be considered ‘fair market value’ in terms of the traditional services and the role that AB advisors play with their clients – simply stated, isn’t fair. Bernstein advisors are wising up to the truth that they are grossly underpaid versus their peers. All the while managing UHNW relationships for elite clientele; generally serving 70-90 wealthy families per team.
Now take that same business to competitors like RBC or Wells Fargo and the team makes $2.5 M – $2.6M annually, operating in an ‘open architecture’ environment, and only has to move 80 households while they are at it.
The disparity in payout is a massive blind spot for Bernstein and will continue to, deservedly so, agitate advisors into the welcoming arms of competitors. One wonders when Bernstein, based on departures, may be forced to make meaningful changes to their grid?
Belgian prosecutors have launched an investigation into whether Swiss bank Credit Suisse (CSGN.S) helped some 2,650 Belgians hide their accounts from tax authorities.
The investigation by federal prosecutors is at the information-gathering stage and no charges have been brought, a spokesman for the prosecutors said on Monday.
The inquiry concerns accounts held between 2003 and 2014 on which Belgian prosecutors received information last year from French authorities, who have also conducted their own investigations into the bank and French customers.
The spokesman said the case concerned up to 2,650 Belgian clients, although some may have already declared their funds to the tax authorities.
“We strictly comply with all the applicable laws, rules, and regulations in the markets in which we operate,” Credit Suisse said in an emailed response to a request for comment on the investigation.
The bank wishes to conduct business with clients who have paid their taxes and fully declared their assets, it said.
Swiss banks have faced similar probes in several countries over the past decade after the country was forced to give up its cherished tradition of banking secrecy.
Original Source: Belgium investigates Credit Suisse over hidden accounts
Deutsche Bank has launched an internal review into the personal banker for President Donald Trump and his son-in-law, Jared Kusher, The New York Times first reported Sunday and Business Insider confirmed.
The company is looking into Rosemary Vrablic and two of her coworkers regarding a 2013 purchase of an approximately $1.5 million apartment on New York City’s Park Avenue from the real estate firm Bergel 715 Associates, a company that Kushner has a financial stake in, according to The Times.
Kushner disclosed Friday in a financial report that he and his wife, Ivanka Trump, earned between $1 million and $5 million in income from Bergel 715, and a source told The Times that Kushner was a part-owner of the firm when the transaction was made.
Banks often have policies barring employees from doing personal business with their clients in order to avoid conflicts of interest between bankers and their employers.
Deutsche Bank spokesperson Daniel Hunter confirmed the review and directed Business Insider to its statement to The Times, which said: “The bank will closely examine the information that came to light on Friday and the fact pattern from 2013.”
Deutsche Bank also told The Times that it was not aware that its employees — Vrablic, as well as Dominic Scalzi and Matthew Pontoriero, two of her coworkers on the company’s private-banking team — had done business with a company connected to Kushner until contacted by the paper.
Kushner and his family have banked with Vrablic since before she started at Deutsche Bank in 2011, according to The Times, and he told the House Intelligence Committee that he introduced Trump to Vrablic “about six years ago.”
Vrablic entered the public spotlight during Trump’s 2016 presidential campaign when he told The Times in an interview about his alleged struggle to find bankers: “Why don’t you call the head of Deutsche Bank? Her name is Rosemary Vrablic.” (Vrablic is and was not the head of Deutsche Bank; that was John Cryan at the time).
Trump’s relationship with Deutsche Bank has repeatedly come under scrutiny. Last year, The Times reported that the bank had loaned him more than $2 billion over more than two decades — with Vrablic personally steering more than $300 million his way despite his long history of defaults.
Federal prosecutors from multiple jurisdictions including the FBI opened an investigation last year into Deutsche Bank after an employee flagged a series of suspicious money transfers between Kushner Companies and Russians.
Lawmakers have also been seeking to use the bank as a way to gain a window into Trump’s personal finances, as it has acknowledged it holds private copies of his tax returns.
Kushner and Vrablic could not be reached for comment on this story.
Original article (link)