Head count down, Wells Fargo has ‘underinvested’ in independent advisers, CEO says

As it proceeds with its overhaul of various business lines involving financial advisers, Wells Fargo Advisors continues to shed advisers.

On Thursday, it reported 12,552 financial advisers under its roof. That’s a quarter-over-quarter head count decline of 267, or 2.1%, and an annual decline of 1,241, or 9%.

In a conference call Thursday with analysts and investors to discuss the bank’s earnings, CEO Charlie Scharf broke down its wealth management businesses into four parts — bank, traditional wealth management advisers, online and independent advisers — and said the bank has overlooked some pieces in the past.

“We feel we have underinvested in the online piece and the independent piece, for sure,” Scharf said.

During a conference call with analysts in July, Scharf made a similar comment, saying that that Wells Fargo’s online brokerage services and platform for independent advisers, who can work as brokers or registered investment advisers, had been “underutilized.”

Wells Fargo is in the middle of revamping its wealth management franchise, and such changes often lead to a reduction of the number of financial advisers at large enterprises. The company is cutting its international wealth management business, resulting in advisers leaving the firm, and it’s also integrating its private bankers into its bigger wealth management business.

A company spokesperson noted that financial adviser revenues continue to rise and the rate at which advisers are leaving the firm is slowing.

“Our average adviser productivity is up more than 21% since last year to a high of $1,141,000 per adviser,” the spokesperson wrote in an email. “This represents the last significant quarter of international [adviser] departures. We also experienced retirements along with some departures from both Wells Fargo Advisors and the Private Bank.”

And the firm is adding large advisers, or those with $1 million or more in annual revenue, the spokesperson added.

The bank’s Wealth and Investment Management group, which includes Wells Fargo Advisors, reported increases in revenues and assets in line with the rise of the broad stock market in the past 12 months.

Wealth and Investment Management revenue in the quarter increased 10% year-over-year and reached $3.62 billion, primarily due to higher asset-based fees on higher market valuations, according to the company, while total client assets of $2.1 trillion increased 13% in the same time, primarily driven by higher market valuations.