Products July 9, 2018

In Focus at UBS: Equity Compensation Technology and the Participant Experience

Besides discussing the rollout of UBS One Source, Michael Barry offers some broader ideas about the role of equity compensation and the importance of communicating the value of equity awards to employees.

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Earlier in 2018, Head of UBS Equity Plan Advisory Services Michael Barry announced the launch of an enhanced equity plan recordkeeping platform, known as UBS Plan Admin Pro.

At the time, he also commended his colleagues for the planned launch of “a transformed participant digital experience, UBS One Source, later this year, which will include a more streamlined experience as well as access to both digital advice and financial wellness tools.”

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Following up on that pledge, the firm recently gave PLANADVISER an exclusive sneak peak of UBS One Source, and Barry explained the plan to begin a phased rollout of the reimagined digital experience for equity compensation plan participants “throughout the summer and the end of 2018.” As Barry noted, eventually the plan is to roll out the platform across the firm’s 180-plus corporate clients and some 800,000 equity plan participants.

“Designed in-house, the newly reconstructed website will deliver financial wellness content, as well as provide effective, user-friendly tools for financial modeling and transacting on equity awards for employees at all levels,” Barry explained. “Embracing the right type of technologies and creating innovative solutions are the heart of our service offering.”

Barry stressed that the new One Source program helps to build deeper adviser-client relationships that “combine convenience, knowledge and effective planning.”

With the updated One Source platform, UBS has introduced and combined several digital financial wellness tools, supported by the firm’s group of corporate stock benefit consultants. The programming aims to “provide all employees with access to tailored advice and guidance through their preferred delivery channels.”

“It also features a modernized, easy to navigate participant web portal and interactive educational content, as well as straightforward awards tracking,” Barry noted.

Barry explained this latest rollout is part of a longer story of technology collaborations at UBS. In 2016, UBS partnered with SigFig to design its first digital advice platform, UBS Advice Advantage, for clients of its UBS Wealth Advice Center. The platform offers portfolio diagnostics, goals tracking features and access to a new investment advisory product, the UBS Advice Portfolio Program. Following this, UBS Equity Plan Advisory Services partnered with Solium, another equity compensation and technology service provider, to create UBS Plan Admin Pro.

More on UBS One Source

Users of the new UBS One Source digital portal will have the ability to conceptualize the equity compensation granted to them by their employer through visual aids and tools; learn about different award types, vesting schedules, important dates and stock price points to monitor; and customize their equity events calendar and setup personal notifications. Further, users can model potential transactions to understand outcomes prior to executing order instructions, and review the impact their equity compensation can have on their overall financial future.

Barry said he has high hopes for the performance of the new platform, and will aim to share more detail about how One Source is utilized by equity compensation clients once that becomes available.

“We’ve always had great wealth management advisers servicing and delivering specialized advice and guidance to equity plan participants,” Barry suggested. “But now, our participants and corporate clients gain access to a greater abundance of intelligent tools that will help them achieve their financial goals.”

Appreciation of the equity award among employees can be low

Besides discussing the rollout of UBS One Source, Barry offered some broader ideas about the role of equity compensation and the importance of communicating the value of equity compensation programs to employees.

“Companies offer equity awards to attract and reward top talent, but participants don’t always recognize the value,” Barry explained. “In our surveys and research, we discovered that when employers follow certain steps and build their programs in specific ways, their employees appreciate their awards a lot more.”

Perhaps most important, employers should incorporate equity awards into the broader financial picture. According to internal UBS surveys, participants value equity awards 13% more when they are also presented with tools to help them consider equity awards within the context of a financial plan.

Next, Barry pointed to the offering of individualized advice on company stock holdings. When participants regularly discuss equity awards with a financial adviser, appreciation rises by 16%. Finally, Barry suggested helping employees see the benefit of diversifying company stock holdings, as participants who diversify their holdings value equity awards 16% more than those who sell all their vested shares.

Barry said UBS research also highlights another important fact for readers to consider. Some companies may not realize that the financial crisis has made many investors skeptical of the markets. As a result, participants don’t always see the full value of equity plans, Barry warned. In fact, according to UBS polling, only two out of five place “considerable value” on equity awards.

UBS research has also examined how participants from a cross-section of companies, industries and service providers feel about their equity awards. The firm learned that certain variables drive perception more than others, and used the data to build out the UBS Equity Award Value Index. In particular, the UBS index shows the participant vesting experience clearly matters.

With a vesting period of greater than six years, participants tend to view equity awards more as a way to build retirement wealth. With a vesting scheduled between three and five years, participants are more apt to view equity awards as a paycheck supplement, and they are less sure how to maximize the potential of awards. With shorter vesting periods, fewer than three years, UBS research suggests the tendency is to view equity awards more as a lottery ticket.

Compliance July 6, 2018

OregonSaves State-Based DC Plan Marks First Birthday

According to state authorities, the combined savings of the first groups of participating savers is approaching $5 million.

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Oregon is among the states that is the furthest along in the launch of a government-administered retirement savings program for private-sector workers.

This week, the OregonSaves program revealed enrollment numbers for its first full year of operation. According to state authorities, the combined savings of the first groups of participating savers is already approaching $5 million. In addition, the state says, hundreds of thousands of additional eligible workers are on track to join as the program continues to expand statewide over the next two years.

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Other states including California, Illinois and Connecticut are developing programs that are similar to the Oregon approach. In a broad statement marking the first anniversary of the program, State Treasurer Tobias Read suggests the pace of signups is advancing, with an average of more than a thousand people now being registered a week to start contributing. Most of the participants are first-time savers, according to Read. The average monthly contribution is $106.

The OregonSaves approach makes available an automatic enrollment payroll deduction Roth individual retirement account (IRA) to workers whose employers do not offer them a retirement savings option. As Read points out, this is a “key attribute.”

“Research from the AARP shows that people are 15-times more likely to save for retirement if there is a work-based option,” he observes.

OregonSaves takes a private-public partnership approach, with investments managed by the private sector in low-cost mutual funds. The program was passed into law by the 2015 Oregon Legislature and is overseen by the State Treasury, which is responsible for public finance and investment programs.

Read also points to strong demand for savings opportunities among workers in the gig economy as a big potential driver of growth in OregonSaves, and he says Treasury is accelerating the availability of OregonSaves to self-employed workers. That option will become available by the end of the year.

According to the State Treasury, OregonSaves improves the state’s business climate and economy by reducing the long-term rate of retirement poverty. In addition, Read points to research showing that even modest savings can help retirees to delay claiming Social Security benefits, allowing them to qualify for a higher level of monthly payments.

Looking ahead, the registration phases are now completed for employers with Oregon workforces between the size of 50 and 99. The next signup deadline is December 15, 2018, and applies to employers with between 20 and 49 Oregon workers.

According to the independent Register-Guard newspaper, OregonSaves now has enrolled more than 32,000 private-sector employees who previously didn’t have access to a retirement savings option at work, with an average payroll withholding of 5.14% of salary.

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