(Dow Jones) When companies announce layoffs, the rank and file typically groan. UBS AG's advisors see the recent announcement of nearly 200 layoffs as a sign that things may be looking up.
The layoffs, including support staff and about 25 managing directors, are concentrated in the areas of marketing and product development and support. They were reported Thursday by The Wall Street Journal.
In this instance, the company has pledged to use the cost savings for broker technology and other advisor support. Also, the elimination of layers of management and duplicate positions will mean faster back-office support for brokers, according to a UBS spokeswoman.
The investment in technology and support for advisors at UBS could make the firm more competitive with Bank of America Corp.'s Merrill Lynch, which invested in a complete overhaul of its tech and services just a few years ago to become the gold standard, and with Morgan Stanley Smith Barney, which is preparing to launch a new brokerage platform next year in light of its recent joint venture.
UBS's new head of Wealth Management Americas, Robert McCann, has said he plans to make UBS more visible and competitive in the wirehouse space by emphasizing the quality of advisors and advisor services, not the quantity. UBS's roughly 7,085-member brokerage force is overshadowed by the 15,000-plus ranks of its competitors.
McCann, who joined UBS last October, has also set goals for making the division more profitable, and has made his strategy clear: turn UBS into a leaner, faster machine.
"McCann is just trying to fix what is broken," said one UBS advisor in the Northeast. "And if that means being more lean, I feel bad for the people who were let go, but that's what he had to do."
The managing directors who were targeted for layoffs provided support for communication between the branch offices and the products-and-services group. Decreasing the levels of bureaucracy in this department will allow the group to make decisions faster, and advisors should see this effect, the spokeswoman says.
UBS has had several layoffs of support staff, client associates and low-producing brokers in the past year as it grappled with the impact of the financial crisis. This, however, is the first round to include managers so high up at the firm.
Some of the managing directors who have left this year are Jamie Price, head of the wealth management advisor group; Doug Black, chief operating officer of private wealth management; Jay Messing, head of private client group sales; and James Pierce, a vice chairman of the wealth management unit.
"McCann doesn't have the loyalties to any of the executives here," said a UBS advisor in the Southeast. "He doesn't have relationships with these guys; it's not like he's going to have to see them at the high school basketball game, so he can make an unbiased decision and do what's best for the firm,"
McCann has brought in several new sets of eyes since his hire, to form a group dubbed the "renewal team." Most of the executives hired by McCann are former colleagues from his 25-year stint at Merrill Lynch. He and his renewal team are expected to announce his long-term plan soon, after conducting a strategizing session lasting 100 business days. That will conclude in the next two weeks.
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