LPL, the nation's largest independent broker-dealer, reported Monday that 15 or the 72 teams of brokers it had signed up in the second quarter — or 21% — had come from Wells Fargo Advisors, the bank's wirehouse channel.
In the same period, two other wirehouses — Merrill Lynch and Morgan Stanley — each lost three brokers to LPL, while the fourth wirehouse, UBS, didn't see any of its brokers join LPL.
"We have certainly benefited from this trend out of the employee world to independence, and Wells Fargo has been one of the companies that has experienced that attrition, without question," said Bill Morrissey, an LPL managing director and divisional president of business development. "I think it's linked to reputational issues they've had, but also the model itself."
Mr. Morrissey made his comments Monday morning in Boston on the sidelines of LPL's annual meeting of advisers, Focus.
"There is always a push, a catalyst, that causes the adviser to look at their current situation and explore their options, and with Wells Fargo it may be the reputational issues they are experiencing," he said. "When advisers start to do the due diligence, they look at technology, service, pricing, practice management support. They then make the decision to go independent or change broker-dealers. It's a basket of issues they want a solution for."
Wells Fargo Advisors, lost 130 advisers in the second quarter, ending the quarter with 14,527 advisers, according to its second-quarter earnings report. It was the third consecutive quarter in which the firm experienced a reduction in adviser head count. Since September 30, Wells Fargo Advisors has seen 559 advisers exit, for an overall reduction of 3.7%.
Shea Leordeanu, a Wells Fargo spokewoman, acknowledged a decline in headcount at the wirehouse, but said that many of its advisers were retiring and that the firm was bouncing back. The past year was its best recruiting year since 2009, she said, and June was the firm's best month for hiring in over a year. She also said August and September look strong for recruiting as well.
Wells Fargo was fined $185 million by regulators in September for opening banking accounts for customers without their knowledge or approval, a scandal that resulted in its CEO losing his job.
Wells Fargo got another black eye two weeks ago, when it was revealed that an outside lawyer representing the firm had mistakenly sent sensitive records of about 10,000 wealthy clients to another lawyer involved in a lawsuit involving the bank.
And then Bloomberg News on Monday reported that a new class action lawsuit alleged that Wells Fargo & Co. bilked millions of dollars from "unsuspecting customer who were forced to pay for auto insurance they didn't need or want,'' pushing nearly 250,000 of them into delinquency. Almost 250,00 vehicles were repossessed as a result of the "scheme,'' according to the lawsuit, filed Sunday in San Francisco federal court.