Wells Fargo and UBS at the table again?

Rumors have resurfaced that Wells Fargo & Co. is talking with UBS AG about acquiring the Swiss bank's retail-wealth-management operations in the U.S. Industry participants and recruiters say they've been hearing from advisers that the firms may be having discussions about a possible tie-up. The rumors may have been inspired by interviews Wells Fargo CEO John Stumpf had with CNBC and Dow Jones last week in which he suggested that the company was potentially interested in an acquisition in the wealth management area. “In the wealth and retirement business we are suboptimized,” Mr. Stumpf told Dow Jones. “If we could jump a curve with the right deal, that's great.” And a curve it would be, according to executive recruiters. Wells Fargo currently has in the neighborhood of 15,000 advisers, many of whom have come from scores of other brokerages —largely through acquisitions. That list of acquisitions includes Wachovia Corp., A.G. Edwards & Sons Inc., Prudential Financial Inc. and First Union Corp. The 6,800 or so UBS Wealth Management Americas advisers would vault Wells Fargo's wealth management business ahead of Bank of America Merrill Lynch and Morgan Stanley Smith Barney LLC in terms of adviser head count. It would also create another huge integration challenge for a company still rationalizing its advisory platform. “As we speak, Wells and Wachovia are still trying to integrate into one firm,” said Mindy Diamond, president of Diamond Consultants. The resulting behemoth also would have trouble staying out of its own way, said Mark Elzweig, who manages an executive recruitment firm in New York. “They would have more than 22,000 advisers and they'll cannibalize their own business,” he suggested. “There would be six guys working at the country club for the same firm.” But Rick Peterson, another recruiter, sees the logic in a Wells/UBS hookup. For one thing, it puts Wells Fargo in the same league as Morgan and Merrill, and secondly, Wells would not have to “pay for the firm twice.” Normally, acquiring firms have to lay out lucrative retention packages to keep the best advisers at the target firm. With UBS hiring so many advisers over the last decade, and particularly over the last several years, most of its people already have recruiting or retention contracts in place. “The UBS advisers are locked up,” Mr. Peterson said. “From a strategic point of view, the deal makes a lot of sense. From a practical point of view, it would be difficult to pull off.” One big question is: What would happen to UBS Wealth Management Americas CEO Robert McCann, as well as the other managers he brought over from Merrill Lynch to run the operation in 2009? By most recruiters' accounts, Mr. McCann has done an impressive job boosting morale in the UBS adviser ranks. While some think that UBS would like to have him run a smaller business focused on high-net-worth individuals, most think Mr. McCann and his team are geared for growing the business. The idea of a sale to a firm with far less cachet than UBS probably would not sit well with the advisers, either. “We want to maintain a boutique standard and go after the big dollar,” said one UBS adviser, who asked not to be identified. “Wells Fargo is still trying to figure out its own culture.” And according to UBS spokesperson Karina Byrne, that's the way it's going to stay. “[UBS CEO Oswald Grubel] has always maintained that the Wealth Management Americas business is not for sale.” “We don't comment on rumor or speculation,” said Tony Mattera, a spokesman for Wells Fargo.