Wells cuts payout to recruiters: Headhunters

Said to be rejiggering fee structure, which is substantially higher than industry average

Nov 21, 2012 @ 2:20 pm

By Andrew Osterland

Wells Fargo
+ Zoom
((Photo: Bloomberg News))

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.

0
Comments

What do you think?

View comments

Recommended for you

Sponsored financial news

Featured video

Events

3 themes shaping your business now

If there are three overriding themes for advisers right now its succession planning, acquisition and hiring millennials. Financial adviser James Loftin discusses how his firm is tackling all three.

Video Spotlight

The Search for Income

Sponsored by PGIM Investments

Recommended Video

Path to growth

Latest news & opinion

The most important tax changes for 2018

The Internal Revenue Service issued inflation adjustments to more than 50 tax provisions for 2018.

Shift to Roth 401(k)s 'highly likely' part of tax reform: former Treasury official Mark Iwry

Mandated contributions to Roth accounts would likely only be partial, as opposed to having a full repeal of pre-tax accounts.

E*Trade acquiring custodian Trust Company of America

Discount broker buying second-tier custodian for $275 million.

Another thousand Dow points higher, and investors yawn

Market milestones keep falling like dominoes, with 51 records broken so far this year.

LPL retains $570 million with super-OSJ deal

Kansas-based nVision Wealth will come under supervision of Chicago-based IHT Wealth Management.

X

Subscribe and Save 60%

Premium Access
Print + Digital

Learn more
Subscribe to Print