UBS is eager to resolve its dispute with the US government because the ongoing legal battle has been damaging morale within the wealth management unti, delaying the plan to hire a new executive to run the unit and driving away customers.
A person familiar with the matter says the financial advisors at UBS Wealth have become worried about the fate of the business. Some brokers feel the broader Swiss bank has been uncooperative when it comes it comes to creative attempts to retain clients by providing innovative services. A few brokers we spoke to believe that bankers at UBS outside the wealth management unit have been avoiding doing business with some UBS Wealth clients, for fear that their division could become tainted by association.
UBS has been having conversations with some top Wall Streeters, including Bob McCann and Sallie Krawcheck, in its search for a new head of wealth management. (Officially, UBS says it hasn’t decided to replace the current chief.) But some of the candidates have raised concerns about becoming involved with the business while its legal fate is still uncertain. At least one candidate has said UBS should resolve the tax avoidance case before he would agree to take on the job.
The damage to the customer facing side of the business was illustrated by what happened when a group of Merrill Lynch financial advisors based in a midwest city decided to come over to UBS. The brokers had assumed that most of their clients would easily switch with them, particularly given the widely reported troubles at Merrill. They discovered, however, that some of the clients were wary of having their money managed by a firm that is the target of federal prosecutors. Once again, fear of somehow being tainted by association with UBS was hurting the business.
All of these feed into each other. Brokers are frustrated that the bank hasn’t yet found a top manager to run the business, and are fearful that customers will leave as the case gets more scrutiny. The resentment over the perceived poor treatment by other portions of the bank also feeds into the decling morale.
“Our message to management is: faster, please,” one UBS financial advisor said.
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