A clear narrative is shaping up amongst wirehouse rivals Morgan Stanley and UBS. As both firms exited the broker protocol within weeks of each other their recruiting strategies have begun to mirror each other as well. Both firms have decided that aggressively pursuing private banking teams at the likes of Goldman Sachs, Bernstein, Bessemer Trust, and even J.P. Morgan is a pathway to stability and revenue growth in their all-important wealth divisions.
Over the first six months of 2020, even with the coronavirus pandemic and civil unrest, UBS continues to announce large team acquisitions that hail from the private banking sector. Managers across the US, at the swiss-based firm, have confirmed to us that deal negotiations no longer include private banking discounts – rather, UBS is paying full freight, and then some, for private banking teams of scale. This is a dramatic shift from years of recruiting teams that may include employment contracts laced with non-compete, non-solicit, and even garden leave language. UBS has decided that it is worth the legal risk.
Morgan Stanley isn’t far behind and is quickly learning from its rival that leaning into the private banking space makes a lot of dollars and sense. Morgan Stanley has begun to back away from any discounting of private banking team deal dollars and treating advisors and their teams no differently than an elite level Merrill Lynch recruit. Again, a major shift in both philosophy and execution.
It now looks like the unrest in markets and potential larger-scale disruption to books of business is on hold, but the impetus to switch firms looks to be at or near all-time highs. Why? The nearly 40% haircut that occurred in a furiously fast downturn spooked a lot of advisors and woke them up to the long-term value of monetizing their hard work right now. Adjusting policies around recruiting deals and the who/what/where/why matrix seems to have shifted at both UBS and Morgan Stanley.
So far, UBS is seeing real dividends in landed recruits. We expect Morgan Stanley to follow suit as the year moves forward.