Wells Fargo sustains more adviser losses following banking scandal
One hundred and thirty advisers left in the second quarter, marking the firm's third consecutive quarter of reductions.
The steady flight of financial advisers from Wells Fargo & Co. following the revelation of a banking scandal at the firm last fall continues.
The company’s retail brokerage, Wells Fargo Advisors, lost 130 advisers in the second quarter. The company ended the period with 14,527 advisers, according to its Q2 earnings report released Friday.
It was the third consecutive quarter of a reduction in adviser head count for the firm.
Wells Fargo was fined $185 million by regulators in September for opening banking accounts for customers without their knowledge or approval.
Since September 30, Wells Fargo Advisors has seen 559 advisers exit, for an overall reduction of 3.7%.
“It is very difficult for advisers today to justify why Wells Fargo is the best place to put the client’s money,” said Danny Sarch, founder and owner of recruiting firm Leitner Sarch Consultants. “That’s where their recruiting, of course, is challenging.”
Mr. Sarch suspects many of the departures are due to the banking scandal, but said there could be a number of variables associated with a reduced head count.
“The net number by itself is woefully insufficient to determine what is going on at the institution,” Mr. Sarch said.
A statement from the company said, in part, “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 advisor teams, and we continue to invest in new ways to train and mentor new talent.”
In a news release announcing the company’s earnings, CEO Tim Sloan said the firm “continued to make progress this quarter in our efforts to rebuild trust and build a better Wells Fargo.”
“While there is still more work ahead of us, we are on the right track and I am confident about our future,” he said.
In May, Wells Fargo announced it would boost bonuses to adviser recruits, at the same time its wirehouse rivals — Morgan Stanley, Merrill Lynch and UBS Wealth Management Americas — indicated they would pull back on such recruiting efforts. Some believe being aggressive with signing bonuses could help shore up adviser head count.
“The weakest firm traditionally still has to give the best deals,” Mr. Sarch said.
Despite the reduction in advisers, the firm continued to ink profits. Net income for the Wealth and Investment Management segment, of which the retail brokerage unit is a part, was up 9% over the prior quarter, hitting $682 million. That’s up 17% from Q2 2016.
Net income for the company as a whole was $5.81 billion in the most recent quarter, up from $5.6 billion in the second quarter last year.
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