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.
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.”
Learn more about reprints and licensing for this article.
