Wells Fargo Advisors 2019 comp plan sees little change

Wells Fargo Advisors 2019 comp plan sees little change
But lowest-producing advisers face a pinch in pay.
DEC 13, 2018

Wells Fargo Advisors told the 9,000 or so advisers in its private client group on Thursday afternoon that the overwhelming majority of them will not see changes to their pay plan next year. Wells Fargo reps who produce more than $250,000 will continue to be paid the same rate they have received since 2011, according to executives at the firm. However, less profitable brokers, those who generate less than $250,000 in annual fees and commissions and have been at the firm seven or more years, will feel some fresh pain. Wells Fargo Advisors has a two-tier system for paying its financial advisers. The majority will continue to see compensation plan grid rates that pay 22% of a base amount, known as a monthly hurdle, that advisers produce in fees and commissions each month. That base amount, or hurdle, ranges from $11,500 to $13,250 and has not changed since 2014. In the second step of the system, advisers generating $250,000 or more will keep 50% of production above those base amount hurdles. For advisers who generate less than $250,000 in fees and commissions, those payout rates will fall to two tiers of 19% on the base amount and 47% after that. The number of advisers facing a pay cut in 2019 is "well below" 5% of those with the firm, John Alexander, head of Advisor-led Business, West, said in an interview Thursday. "We've had this plan in place since 2004, and it's been largely unchanged," Mr. Alexander said. "We are obviously committed to it. The fact that we are making minimal changes in 2019 is evidence of that." Wells Fargo Advisors has lost more than 1,000 advisers since September 2016, when the brokerage network's parent company, the giant bank Wells Fargo & Co., revealed that bank employees had secretly created millions of unauthorized accounts in the names of customers without their consent. While many advisers have retired, hundreds have left Wells Fargo Advisors to work at competitors or to start their own RIAs. When asked whether the 2019 compensation plan provided any type of increase for advisers who stayed at the firm in the face of its problems, Mr. Alexander said that the firm did not discuss in detail its recruiting or attrition of advisers. That struck one recruiter as a missed opportunity for the firm. "Maybe Wells Fargo could slow the bleeding if it had a new plan that gave advisers an opportunity to earn a few more points," said Casey Knight, executive vice president of ESP Financial Search. In September, UBS Financial Services Inc. told its more than 6,900 financial advisers in the United States that they will see little to no change next year in how they are paid by the firm. While the status quo has prevailed, for the most part, in the pay plans of Wells Fargo Advisors and UBS, advisers with Morgan Stanley and Merrill Lynch saw some changes. Earlier this year, Morgan Stanley released a pay plan designed to goose its 15,000 financial advisers to chase assets using new technology when it unveiled pieces of its 2019 compensation plan. And last month Merrill Lynch told its 15,000 registered reps and financial advisers that they were facing the prospects of a slight cut in compensation in 2019, when the firm will begin withholding a small portion of advisers' monthly fees and commissions.

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