The wealth management house declined to comment about the story about its work in the RIA space, which cited unnamed sources.

A consultant and recruiter has criticized unconfirmed moves by UBS claiming that it is creating an operation to sell products and services through independent advisors in the US.

A report by AdvisorHub said the changes are coming after the recent hire of Joseph Connellan, managing director, and colleague Jean Smart, a former Citi colleague of Connellan. Smart is described by the publication as being “in charge of business strategy for the new registered investment advisory custody unit”. The publication quoted “UBS sources” but did not name them. Connellan and Smart did not respond to requests for comment, AH said.

Family Wealth Report contacted UBS and the Swiss bank, which is the world’s largest wealth management firm, but they declined to comment on the matter.

The AH report said that UBS is targeting the growing RIA space.

Responding to the report, Mindy Diamond, president of Diamond Consultants, a recruiter and consultant in the US, said – on the assumption that the AH story is correct – that it raised “more questions than answers”. 

“Is this unit just for existing RIAs or will they allow their existing advisor force to migrate into the RIA channel? If they do, then they are cannibalizing their captive 6,300 advisor force. If they don’t allow their existing advisor force into this new channel, then they are sending a terrible mixed message. They will anger their existing advisor force tremendously,” she said. 

“Wealth management for a captive advisor force is a high-margin business. Custody is a low-margin business. Why would UBS want to cannibalize its 6,300 captive advisors and turn them into a lower margin asset?” she continued. 

“While Wells Fargo has been a multi-channel option for years, UBS has been a single channel model. Wells, at least understands the independent space better than UBS does. Speaking of Wells, they do not allow their advisors to move from one channel to the other without giving up their deferred comp or paying a tariff to the private client group. I can’t imagine a scenario where UBS would allow advisors to slide into the RIA custody unit and still keep their deferred comp.

“I think that UBS getting into the custody business actually creates a more exciting positive for the independent space because it will generate more interest in Independence. UBS advisors will begin to explore UBS' custody unit if allowed and see how limited and sub-par it likely will be. They will then look to compare to the institutional custodians like Fidelity and Schwab and find a whole different world,” she added.