UBS is bracing for a significant loss of financial advisors in the United States following controversial changes to its compensation structure. As reported by InvestmentNews, UBS could lose as much as 10 percent of its U.S. advisor base — roughly 600 advisors — by the end of 2025.

The firm acknowledged in January that last year's adjustments to its pay plan already had prompted some advisors to leave. The newly implemented changes include cuts to 12b-1 fees and reductions in grid-based compensation, particularly affecting lower-producing advisors. Those moves are part of UBS's broader strategy to improve profit margins, but they have also fueled dissatisfaction among its financial advisors.

The 12b-1 fees, which mutual funds pay annually to cover marketing and distribution expenses — including a portion that typically goes to financial advisors — have been a point of contention. UBS's decision to cut these fees, along with its elimination of a unique team bonus, has made advisors reassess their positions.

InvestmentNews reports that UBS's U.S. wealth management division currently operates with a profit margin of approximately 10 percent, with a target of 15 percent by 2027. In contrast, competitors Morgan Stanley and Bank of America maintain wealth management profit margins close to 30 percent.

Financial Advisor Transitions consults advisors nationwide to explore employment transition options and to preserve and protect their practice in any transition that they make.