Wells Fargo Advisors' big bet on stabilizing its sales force of financial advisors by focusing on its independent broker and investment advisor channel appears to be paying off, according to senior executives and industry sources with knowledge of the changes there.
Wells Fargo Advisors is the broad marketing umbrella for close to 12,000 bank advisors, wealth management advisors and independent advisors.
With thousands of financial advisors leaving or retiring from Wells Fargo since the banking scandals of 2016, the bank has turned to its independent business model, where advisors pocket a larger percentage of revenue, as a way to hang onto its veterans.
Wells Fargo's direct competitors, Merrill Lynch, Morgan Stanley and UBS, do not allow financial advisors to work as independent brokers and investment advisors. UBS for a time toyed with the idea but ultimately pulled the plug on its plans.
Wells Fargo in 2022 took a big step in bolstering its independent broker-dealer, Wells Fargo Advisors Financial Network, known as FiNet, when it created a new bonus for some, but not all, advisors who would have otherwise lost hard-earned deferred compensation.
Now, Wells Fargo appears to be backing up its financial commitment with more practical, day-to-day matters.
"FiNet has made very noticeable increases in support staffing to practices, adding relationship managers and dedicated recruiters to make these resources readily available," said one well-placed industry source. "Significant effort has been made in recent months with roadshows and virtual meetings to introduce new staff, many of whom have been reallocated from Wells Fargo Advisor's private client group."
The private client group is the traditional employee wealth management channel of the business where financial advisors pocket a smaller percentage of annual revenue, in the range of 35% to 40%, but also have access to the bank's wealthiest clients. Independent brokers and investment advisors usually keep more than twice that amount of revenue for their own.
The advisors at Wells Fargo work under its Wealth and Investment Management group, known internally as WIM.
Meanwhile, Wells Fargo & Co. CEO Charles Scharf this morning during a call with investors to discuss second quarter earnings mentioned the wirehouse's newfound focus on its independent advisor business. "In our wealth and investment management business, we have substantially improved advisor retention and have increased the focus on serving independent advisors and our consumer banking clients, which should ultimately help drive growth," Scharf said.
"Earlier this year, we announced that Erik Karanik has taken on the new role of Head of WIM Independent Solutions," a spokesperson wrote in an email. "In this newly created position, Erik is responsible for accelerating growth across WIM’s independent business."
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