The information below is current as of the revision date and is subject to change at our discretion. Last revised December 2021.
UBS Financial Services receives additional compensation in connection with most mutual funds in which your assets are invested. This compensation is a result of distribution, shareholder servicing, administration, marketing, or revenue sharing agreements we have with the sponsors of those securities.
Networking and Omnibus Fees
UBS Financial Services Inc. receives networking fees or omnibus service fees in consideration for certain services we provide on behalf of mutual funds, which are ancillary to the effecting of mutual fund transactions. Networking and omnibus fees generally are paid by mutual fund sponsors from investor assets in mutual funds, but in some cases are subsidized, in part, by affiliates or the distributor of the mutual funds.
Networking fees are generally calculated by applying our standard networking rate of $4-$13 for each mutual fund position that exceeds $500 and is held at UBS Financial Services Inc., though some fund companies choose to calculate this rate expressed in basis points on assets. Depending on asset levels, a basis points fee will result in a higher or lower fee than a per position fee. Exclusions will apply to positions below $500 and certain discretionary retirement accounts. Your Financial Advisor does not receive a portion of this compensation.
Omnibus fees range from $10-$26 per position, are assessed per client and can vary by share class. Some fund companies may choose to calculate this rate expressed in basis points on assets, which can result in payments in excess of $26 per position. Some asset managers making these payments consider the excess of what the mutual fund would otherwise have paid for these services on a per position fee schedule as a form of revenue sharing. Exclusions apply to positions below an asset level mutually agreed upon by UBS and the fund company, certain discretionary advisory and retirement accounts, and certain funds and/or share classes. A portion of the payments we receive for omnibus processing is paid to a sub-account vendor. Your Financial Advisor does not receive a portion of this compensation.
In addition to sales loads, 12b-1 fees, networking, omnibus and processing fees, UBS Financial Services Inc. receives other compensation from certain distributors or advisors of mutual funds that we make available for purchase. These separate compensation amounts (commonly referred to as "revenue sharing") are based on two components: (i) the amount of sales by UBS Financial Services Inc. of a particular mutual fund family to our clients (excluding sales through wrap-fee programs), and (ii) the asset value of a mutual fund family's shares held by our clients at UBS Financial Services Inc. (including wrap-fee programs). We require that these payments be paid directly from the distributor or advisor, and not from the mutual funds or indirectly through mutual fund portfolio trading commissions. Revenue sharing payments are intended to compensate us for ancillary services in connection with effecting sales of mutual fund shares. Except as noted below, none of these amounts are rebated to you or paid to the Financial Advisor or his or her branch office. However, these amounts are allocated to the individual branch offices as "non-compensable revenue" (revenue that is not paid out to Financial Advisors or Branch Office Managers) but are considered part of the overall profitability of the branch, and as one of several components used in determining Branch Office Manager compensation.
Many mutual fund companies pay revenue sharing to us, including our affiliate, UBS Asset Management. UBS Financial Services determines the level of access to our branches based on our own review and evaluation of mutual funds and fund families. There are multiple factors involved in determining a particular mutual fund’s level of access to our branches. Although revenue sharing is one factor, others include understanding of business goals, quality of sales personnel and marketing material, range of products, level of service to Financial Advisors and Branch Managers, participation of funds in researched investment models, and branch discretion.
In general, we charge each mutual fund family the following amounts (other than money market and offshore funds): (i) 0.15% per year (paid quarterly) on all sales of mutual fund shares (excluding sales through wrap-fee programs); (ii) up to 0.20% per year (paid quarterly) of the asset value of all equity mutual fund shares held at UBS Financial Services Inc.; and, (iii) up to 0.20% per year (paid quarterly) of the asset value of all fixed-income mutual fund shares held at UBS Financial Services Inc. (other than money market or offshore funds). Some mutual fund families are be subject to a minimum annual payment which, in some instances, result in a fee that exceeds the percentages described above. Certain mutual fund companies pay a flat fee annually which in some instances exceeds the rates listed above. Except as noted below, this calculation includes shares of affiliated and non-affiliated funds in our wrap-fee programs, but does not include PACE Money Market investments, mutual fund assets held at other financial institutions and ERISA and IRA assets in certain advisory programs.
Although we seek to apply a level, standard payment schedule for all of the mutual fund companies whose funds we sell, we recognize that mutual fund companies approach revenue sharing in a variety of ways, and that some mutual fund companies decline to pay revenue sharing exactly at the levels listed above or at all, which presents a financial disincentive for us to promote the sale of those funds that do not pay us at the levels listed above.
Revenue sharing payments present a conflict between our interests and those of our customers because the payments give us a financial incentive to recommend that our customers buy and hold shares of those funds that we maintain on our distribution platform and for which we receive revenue sharing payments. Although mutual funds from more than 300 different mutual fund families are available through our distribution platform, this is only part of the universe of mutual funds that are available to our customers in the marketplace. No portion of the transaction fees are paid to Financial Advisors.
In addition to the payments described above, some mutual fund distributors and/or advisors for mutual funds available on our platform contribute funds to support our Financial Advisor education programs. The contributions are used to subsidize the cost of training seminars we offer to Financial Advisors through specialized firm-wide programs and regional training forums. These contributions subsidize a significant portion of the costs incurred to support the training and education of Financial Advisors, Branch Office Managers, Field Leadership, and other personnel as well as client education and product marketing efforts conducted regionally and nationally by product specialists employed by UBS. The training events and seminars can (and often) include a non-training element to the event such as business entertainment which is not subsidized by vendors.
Not all vendors contribute to our education efforts. Neither contribution towards these training and educational expenses, nor lack thereof, is considered as a factor in analyzing or determining whether a vendor should be included or should remain in our programs or our platform. Contributions can vary by vendor and event. In some instances, the contributions per vendor (as well as the aggregate received from all vendors) are significant. Some vendors decide to contribute at levels different than those we request. Additional contributions can be made by certain vendors in connection with specialized events or education or training forums. Your Financial Advisor does not receive a portion of these payments. However, their attendance and participation in these events, as well as the increased exposure to vendors who sponsor the events, could lead Financial Advisors to recommend the products and services of those vendors as compared those who do not.
In addition to the revenue sharing payments and contributions to training and education described above, in the ordinary course of business, we and our Financial Advisors, from time to time, receive non-cash compensation from mutual fund companies, investment managers, insurance vendors and sponsors of products that we distribute. This compensation includes promotional items, occasional gifts, meals, tickets and other entertainment, sponsorship support of training events and seminars, various forms of marketing support and, in certain limited circumstances, the development of tools used by the Firm for training or record-keeping purposes. UBS Financial Services Inc. remains committed to investing in long-term relationships and we remain dedicated to helping you pursue your investment goals. If you have further questions regarding mutual funds, please feel free to contact your Financial Advisor.