The UBS Non-solicit Mulligan


What happened at UBS last week has to rank as one of our industry’s top FUBARs of all-time.

Just to review, it went something like this:

In order for you to get that deferred comp you already earned, please e-sign this painless doc that simply states: ‘If I ever leave UBS I can NOT Solicit MY clients until UBS has had access to them for one full year.’ (Satire)

Solicitation can include:

Running into a client at the grocery store and asking them for directions to the dairy aisle.

Seeing your best client at your country club and asking him how the family is doing.

Seeing a client at the Easter dinner table and asking them to “please pass the gravy”.

Some people surmised that UBS got contract-envy when they saw how Morgan Stanley had inserted onerous non-solicit language into their contracts, perhaps not realizing that MS did it while handing their advisors/recruits truckloads of INCREMENTAL cash….aka consideration.

So, what happened next? Aside from every UBS Advisor calling their agents and lawyers?

Many UBS advisors read the actual document and slammed on the brakes. One can only imagine some of the thoughts:

‘HEY! This feels like career suicide! What if my employer gets kicked out of the US for something outrageous like smuggling diamonds out of the country in toothpaste tubes and my clients say ‘we’re leaving!’ (Like in 2008). Can I follow my clients?’The UBS document had your answer:

Sorry, you are free to leave, but not with OUR clients, we need the option to sell them to the highest bidder…sign here, and have a nice day.Let’s do some real-life math.

Let’s say your team is doing $6million. The business is worth $15 million (at least!) as you sit there right now. If you signed that 12 Month Non-Solicit CONTRACT, you just SOLD your business in trade for YOUR $150,000 of deferred comp. (Monies owed you, as agreed to,12 months ago.) So instead of a 250% to 320% 10 year deal, you just printed a lifetime deal for 1% of that $15 million bid’.

Apparently Weehawken’s phone lines overheated because on Friday (2/23/18), UBS held a quick firmwide conference call and offered mulligans to any FA who had signed the doc and wanted to UN-sign it. The catch? You were required to rescind your deferred comp “award”. No signature? No money. More outrage.

The fubar was now resembling the Fukushima meltdown. My phone was ringing off the hook into the Friday night hours. The whole industry was watching as Tom and Brian scrambled the jets to fight the perception that they had attempted to lock down their sales force using the FAs’ own money as consideration. Soon enough, UBS scrapped the whole idea and took a GIANT mulligan for themselves.

If I was a UBS FA I would ask my branch manager for every document that represents anything resembling a contract in any way shape or form that has my signature on it; electronic, ink, invisible ink, whatever.
I’m not a lawyer, but anything with your signature on it is by definition a contract. Get a copy. Now is the perfect time to do that.
UBS has put themselves in a very tough spot. Everyone knows they are trying to tie down their sales force and will go to great lengths to get it done. If they had succeeded in this ham-handed attempt? The UBS financial advisors might as well have gotten the UBS keys tattooed on their shoulders.