EXCLUSIVE: UBS Wealth to Raise Customer Account Fees in 2018
(Corrects customer assets in last paragraph to $1.25 trillion, not billion.)
UBS Wealth Management Americas will impose a hike in customer account fees in 2018 that will affect households who keep less than $2 million with the firm, a move expected to create some unpleasant conversations, said advisors informed of the plan.
In an acknowledgment of the sensitivity of the decision, UBS is telling branch managers about the hike on a conference call today so they can work out ways to communicate the change to the firm’s almost 7,000 brokers after the Thanksgiving holiday, said people briefed on the decision. Customers are expected to be told of the changes in early December.
The Swiss bank currently waives account fees for U.S. customers who have $1 million in their combined household accounts and who generate fees and commissions of $10,000 for the firm.
UBS will offer the waiver next year only to customers who have kept an average of $2 million in their accounts as of the end of November 2018. The revenue waiver will be eliminated, said a person with knowledge of the plan.
The maximum fee per household relationship with be $500, up from $150, the source said.
Although the fees are relatively low for the wealthy people UBS targets, customers and advisors (who do not get any of the fee) often chafe at maintenance charges and other “nuisance fees.”
“The changes will cause some grumblings, especially for teams that waive client fees and pay them out of their own production, but overall it’s not the worst change out there,” said one multimillion-dollar producer briefed on the plan.
On a percentage basis the hikes look sizable. The firm’s core for taxable transactions in regular and individual retirement accounts will be assessed $175, up 17% from $150 and more than double the $75 currently charged for IRAs.
Estimating that the fee hikes would cost a $3 million-revenue team some $3,000, one broker said many teams will simply pay the fees “to avoid annoying conversations with good clients.”
In furtherance of its goal to have customers tell brokers where they keep outside accounts, UBS will count money they list in the firm’s My Total Picture online account aggregator toward the $2 million fee waiver, the source said.
UBS Wealth Americas had $1.25 trillion of client assets as of September 30, despite a net outflow of $2 billion from accounts due to financial advisor attrition. The firm’s advisor count fell by 54 during the quarter (and by 221 over the year) to 6,861 as of the end of the quarter. Its expenses rose by $286 million due to higher compensation, and its third-quarter pretax profit fell 4% from the year-earlier period.UBS spokespersons did not respond to a request for comment about the changes.