Wells Fargo Advisors is cutting its fees for recruiters who bring financial advisers to the bank's three adviser channels, recruiters say.
The industry standard for recruitment contracts is 6% of the adviser's trailing 12-month production. But Wells has been offering recruiters a major incentive with a staggered fee structure significantly higher than the industry average.
Formerly, Wells had paid 6% for advisers with less than $400,000 in production but 10% for those with production between $400,000 and $750,000. It paid 6% on production over the $750,000 threshold.
The company plans to cut the midtier fee to 8%, according to recruiters.
One recruiter also said Wells planned to cut recruiter payouts for advisers going to the bank channel (as opposed to the private-client group or independent channel) to a flat 6%, as they tend to bring a lower percentage of their clients with them.
Wells Fargo spokeswoman Erica S. Van Ross declined to comment.
Wells has been on a recruiting roll since August, bringing in 24 advisers managing a combined $2.2 billion.
That could change.
“I think you'll see a significant impact on lead flow to Wells from this,” said Ron Edde, director of recruiting for Millennium Career Advisors Inc.
Some headhunters aren't startled to see the 10% payout cut, and they don't expect it to hurt Wells significantly in the recruiting community.
“It was nice getting that 10% payout, but I'm surprised they kept it in place for as long as they did,” said recruiter Mindy Diamond, who does a significant amount of business with Wells. “We won't be sending any fewer leads to Wells because of the reduced fee.”
Another, who asked not to be identified, said the change wouldn't affect his behavior, either. “They've always paid more. Now they're not going to pay quite as much more,” he said. “It may affect their business some, but they're still No. 1 in payout.”
One recruiter viewed the move as a first step to cutting out external firms altogether, saying that Wells could make an internal hire to leverage information from the 800 recruiters it currently works with.