Wealth management helps drive Wells Fargo third quarter

Market performance, money flows push Wells Fargo Advisors' assets to record

By Trevor Hunnicutt

Oct 11, 2013 @ 2:06 pm (Updated 2:46 pm) EST

wells fargo, advisers, client assets, third quarter, earnings, wirehouse
Bloomberg News

Wells Fargo & Co.'s wealth management businesses delivered higher profits in the third quarter as market performance and money flows drove client assets — and fees — higher, bank executives said Friday.

Wells Fargo's Wealth, Brokerage and Retirement segment earned $450 million in profit, up 33% from the third quarter of last year, driven in part by higher interest income and asset-based fees, according to chief financial officer Timothy Sloan.

The retail-brokerage arm of Wells' business, Wells Fargo Advisors, managed a record-high $350 billion in client assets, a 17.9% increase from last year. That business appeared to benefit from both new assets from clients and the strong performance of financial markets, but fees were hurt by fewer brokerage transactions. Overall client assets as of Sept. 30 were $1.3 trillion, an 8% increase since the end of the third quarter of 2012.

Head count at the firm is also growing. Wells Fargo employed 15,285 financial advisers in the quarter, an increase of 17 from the second quarter. The firm's largest reported move during the quarter was bringing The Alpert Group, a team of four advisers who managed about $1 billion at Morgan Stanley, to its offices in Woodbury, N.Y.

Wells Fargo Advisors is the third-largest brokerage by advisers and client assets. Bank of America Merrill Lynch and Morgan Stanley Wealth Management vie for first. Both companies will report earnings next week.

Overall, Wells Fargo's third-quarter profit climbed 13% to a record as fewer loan defaults and lower expenses helped overcome weakness in mortgage lending, according to the bank, the largest home lender in the U.S.

Net income advanced to $5.58 billion, or 99 cents a share, from $4.94 billion, or 88 cents, a year earlier, the San Francisco-based company said in a statement. The average estimate of 33 analysts surveyed by Bloomberg was 97 cents a share, excluding some items.

Wells Fargo stock was about flat in early-afternoon trading.

Brokerage advisory, commissions and other related revenue bring nearly a quarter of fees at the bank, 22% in the third quarter, while trust and investment management added another 8%.

Wealth management assets at the firm were up 5% from the third quarter of last year to $209 billion, individual retirement assets were up 10% to $326 billion, and institutional retirement plan assets were up 11% to $288 billion.

Cross-selling increased at the firm, as well, growing to 10.41 products per household, from 10.27 last year.

This story was supplemented with reporting from Bloomberg News.()

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