Advisers on the Move

Since banking scandal, Wells Fargo advisers with more than $19.2 billion leave firm

Despite a trying year, the firm has said it will sweeten signing bonuses for veteran advisers

Aug 16, 2017 @ 10:51 am

By Bruce Kelly

It's been almost a year since a banking scandal rocked Wells Fargo & Co., and its brokerage business has seen a steady stream of departures since, with InvestmentNews tracking 70 teams of advisers working with $19.2 billion in client assets leaving from last October through the end of June.

Over the same period, Wells Fargo Advisors added 13 teams of advisers with $1.7 billion in assets under management, according to InvestmentNews data.

It's been a trying year for the giant bank. 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. A steady stream of problems at Wells Fargo has come to light over the past 11 months; in July, it was revealed that the bank accidentally released a trove of data of its wealthy clients, including customer names and Social Security numbers. Also in July, Wells Fargo was found to have forced unneeded collision insurance on consumers who financed their car purchases.

InvestmentNews' Advisers on the Move data takes into account broker-dealers' public announcements about advisers joining their firms as well as news reports in the trade press about advisers switching firms. It does not capture all such moves.

Wells Fargo Advisors, the brokerage group, 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 Sept. 30, Wells Fargo Advisors has seen 559 advisers exit, for an overall reduction of 3.7%.

Wells Fargo Advisors has not backed down from recruiting. In May, after wirehouse competitors Morgan Stanley and Merrill Lynch said they were scaling back recruiting efforts, Wells Fargo Advisors said it will sweeten signing bonuses for veteran advisers. The question hanging over the firm is whether the lure of large bonuses is enough for advisers to commit to a firm that has seen the reputation of its parent company tarnished.

"Not talking to Wells Fargo advisers right now is recruiting malpractice," said Danny Sarch, an industry recruiter. "Every firm has issues, but they are the one with more issues on the exit side than any other."

"We recruit for Wells Fargo and have a lot of advisers interested in the firm," said Howard Diamond, chief operating officer and general counsel at Diamond Consultants Inc., a recruiting firm. "They are the only wirehouse out there paying a competitive deal with Morgan Stanley, Merrill Lynch and UBS all pulling back a bit. Wells Fargo is still in the recruiting game, as far as we are concerned. The brokerage arm is still a viable player."

He characterized Wells Fargo's recruiting deal as an "enticement," but another strength for the firm is that there is both a Private Client Group for employee advisers and Financial Network, or FiNet, for independent reps.

"Most of the negative issues concern events that happen at the bank, and when the brokerage has same name you have issues," Mr. Diamond said.

Wells Fargo retail brokerage client assets roughly totaled $1.6 trillion at the end of June 30 compared with $1.5 trillion at the end of June 2016, an increase of 6.7%, according to the bank's second quarter earnings report. Over the same period of time, the S&P 500 increased almost 19%.

"We are seeing strong revenue growth, and our clients are investing more assets with us," wrote spokesperson Emily Acquisto in an email. "Recent demographic and regulatory shifts have resulted in some retirements across the industry. We feel good about our pipeline of experienced recruits and the new trainees that are joining adviser teams, and we continue to invest in new ways to train and mentor new talent."

0
Comments

What do you think?

View comments

Recommended for you

Upcoming Event

Nov 13

Conference

Best Practices Workshop

For the sixth year, InvestmentNews will host the Best Practices Workshop & Awards, bringing together the industry’s top-performing and most influential firms in one room for a full-day. This exclusive workshop and awards program for the... Learn more

Featured video

Events

InvestmentNews celebrates diversity & inclusion in the financial advice business

Highlights of the Excellence in D&I Awards, showcasing the achievements of 26 individuals and firms that are moving the needle when it comes to diversity and inclusion.

Latest news & opinion

Don't be fooled by the numbers — the industry is in a dangerously vulnerable state

Last year's stock market gains helped advisers turn in solid growth in assets and revenue, but that growth could disappear in the next market downturn.

Divided we stand: How financial advisers view President Trump

InvestmentNews poll finds 49.2% approve of his performance, while 46.7% disapprove. How has that changed over the course of his presidency?

10 states with the most college student debt

Residents of these states have the most student debt when you consider their job opportunities.

Invesco to buy OppenheimerFunds

Deal brings Invesco another $246 billion in assets, as well as high-fee actively managed funds.

Dawn Bennett found guilty of $20 million Ponzi scheme

Jury took less than five hours to convict the former financial adviser and radio host.

X

Hi! Glad you're here and we hope you like all the great work we do here at InvestmentNews. But what we do is expensive and is funded in part by our sponsors. So won't you show our sponsors a little love by whitelisting investmentnews.com? It'll help us continue to serve you.

Yes, show me how to whitelist investmentnews.com

Ad blocker detected. Please whitelist us or give premium a try.

X

Subscribe and Save 60%

Premium Access
Print + Digital

Learn more
Subscribe to Print