Wells Fargo Advisors' midyear pay tweaks

Wells Fargo Advisors' midyear pay tweaks
Broker-dealers are increasingly chasing registered investment advisor assets.
APR 08, 2024

Wells Fargo Advisors continues to tinker with its compensation plan for advisors, this time focusing on a series of changes to its fee on advisory programs that could add to or subtract from financial advisors' pay.

According to a well-placed industry source, who spoke confidentially to InvestmentNews about the midyear compensation updates, the changes will have an impact on advisory accounts at the wirehouse, which has 12,000 financial advisors across various business channel.

Depending on the mix of assets in those accounts, about one-third of Wells Fargo's advisors could see a significant boost to their compensation, while the other two-thirds could take a hit of up to $1,000 a month, according to the source.

The one-third of Wells Fargo's advisors who could see the compensation bump from the changes are those who use money managers like T. Rowe Price and other third parties, the source said. "This could be a huge boon for those advisors."

"Compensation drives financial advisors' behavior," said Danny Sarch, a veteran industry recruiter.

Broker-dealers are increasingly chasing registered investment advisor assets, and using bonuses and boosted compensation as ways to motivate advisors. RIA assets charge annual fees and are regarded in the wealth management business as stickier for firms and advisors.

As a result of the steady revenue stream from RIA assets, wealth management firms that are RIAs also are seeing higher valuations in the current mergers and acquisitions marketplace than broker-dealers, which charge commissions.

The financial advisors who benefit from the change would be getting a piece of the revenue the firm collects when advisors select a third-party money manager, according to the source. To compensate for at least some of the lost revenue, Wells Fargo Advisors is adding a four-basis-point, or 0.04%, charge on assets of private client group advisors by midyear.

"It sounds like a lot of pressure to increase charges to advisors," the source said.

Wells Fargo had $558.4 billion in advisory or RIA assets, according to its most recent Form ADV with the Securities and Exchange Commission, which was updated last month.

A Wells Fargo Advisors spokesperson did not respond Monday morning when asked to comment.

Meanwhile, the firm also revealed in its Form ADV from March that it reduced its platform fee for advisory account programs last year to 0.05%, from 0.059%.

Wells Fargo Advisors has also been reshuffling its lineup of senior executives as it focuses on growth in its independent broker and registered investment advisor businesses.

US valuations rich, Japan a better bet, says Morgan Stanley's Shalett

Latest News

The 2025 InvestmentNews Awards Excellence Awardees revealed
The 2025 InvestmentNews Awards Excellence Awardees revealed

From outstanding individuals to innovative organizations, find out who made the final shortlist for top honors at the IN awards, now in its second year.

Top RIA Cresset warns of 'inevitable' recession amid tariff uncertainty
Top RIA Cresset warns of 'inevitable' recession amid tariff uncertainty

Cresset's Susie Cranston is expecting an economic recession, but says her $65 billion RIA sees "great opportunity" to keep investing in a down market.

Edward Jones joins the crowd to sell more alternative investments
Edward Jones joins the crowd to sell more alternative investments

“There’s a big pull to alternative investments right now because of volatility of the stock market,” Kevin Gannon, CEO of Robert A. Stanger & Co., said.

Record RIA M&A activity marks strong start to 2025
Record RIA M&A activity marks strong start to 2025

Sellers shift focus: It's not about succession anymore.

IB+ Data Hub offers strategic edge for U.S. wealth advisors and RIAs advising business clients
IB+ Data Hub offers strategic edge for U.S. wealth advisors and RIAs advising business clients

Platform being adopted by independent-minded advisors who see insurance as a core pillar of their business.

SPONSORED Compliance in real time: Technology's expanding role in RIA oversight

RIAs face rising regulatory pressure in 2025. Forward-looking firms are responding with embedded technology, not more paperwork.

SPONSORED Advisory firms confront crossroads amid historic wealth transfer

As inheritances are set to reshape client portfolios and next-gen heirs demand digital-first experiences, firms are retooling their wealth tech stacks and succession models in real time.