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.
Chicago-based Mesirow Fiduciary Solutions adds flexPATH's plan-level outsourced fiduciary book, boosting its retirement market reach to $164 billion.
Also, Raymond James's employee advisor channel adds breakaways from Wells Fargo and Stifel, while UBS welcomes an ex-Morgan Stanley duo in Indiana.
It promised guaranteed principal and 10% monthly returns. The SEC says it invested nothing.
Ten years after entering the fee-based annuity market, MassMutual Ascend says nearly half its lifetime sales came in the past two years alone – but barriers remain among fee-only advisors.
Amplify, WealthReach, Zeplyn and Zocks have unveiled partnerships aimed at automating portfolio management, content creation, account opening, and client communication.
Northern Trust’s Ken Lassner shows advisors how to convert volatility into after-tax portfolio gains
Dan Biagini of American Equity says the steady decline of pensions, longer lifespans and a reset in interest rates are rewriting how advisors build retirement income
