After several years of watching financial advisers jump ship to other firms in the wake of scandals, Wells Fargo & Co. is now resorting to laying off reps and advisers as the giant bank works to reduce expenses.
Wells Fargo has reportedly begun cutting hundreds of jobs at the bank to cut costs during the COVID-19 pandemic and a slump in profits, but laying off financial advisers is clearly a rarity in the wealth management industry, as those employees are key to generating revenues.
In its earnings report released Wednesday morning, the bank reported a year-over-year decline of 815 advisers, a drop of 5.9%. Wells Fargo Advisors now has 12,908 advisers.
"While this change represents retirements and some natural adviser attrition, it also includes the displacement of a sizable group of salary and bonus advisers as a result of the company’s work to become as efficient as we can," wrote spokesperson Shea Leordeanu in an email. Displacements is industry shorthand for layoffs.
Compared to the second quarter, Wells Fargo reported 390 fewer advisers at the end of September.
One Wells Fargo adviser, who asked not to be named, said the sharp drop was due to job cuts that hit a group called Financial Relationship Advisors particularly hard. Those advisers are paid a salary and bonus rather than from the grid, which is a formula that compensates financial advisers based on a percentage of total sales.
The Financial Relationship Advisors at Wells Fargo is a group of advisers who get accounts from veterans who had been incentivized to hand them accounts, according to the adviser.
"They just let a bunch go this past quarter to bring down expenses," the adviser said.
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