Wells Fargo & Co.’s multi-year plan to support and build its independent broker and advisor channel is to keep on rolling in 2025, according to the bank’s chief financial officer, Michael Santomassimo.
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 and attract experienced recruits.
Wells Fargo's direct competitors, including 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.
“To drive customer growth in the consumer businesses, we plan to continue scaling our marketing efforts, modernizing our branch footprint and increasing the number of premier bankers and financial advisors,” Santomassimo said during a conference call with analysts to discuss the bank’s fourth-quarter earnings. “We are also focused on onboarding more independent advisors as we continue building out our independent brokerage channel.”
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.
The next step in the bank’s progression to work with independent advisors would be for Wells Fargo Advisors to bolster its independent registered investment advisor operation, according to one industry source.
That would involve expanding its clearing and custody business for independent RIAs and wealth management firms. Wells Fargo’s clearing and custody business operates under the name and brand of First Clearing.
“From what I infer, the next piece will be building out the RIA custody and First Clearing business,” said the source, who spoke privately to InvestmentNews about Wells Fargo. “So, the business would track the true lifecycle of an advisor, from W-2 employee to independent contractor to advisor at an RIA.”
“The technology platform continues to improve at FiNet, albeit slowly,” the source added.
Meanwhile, the bank’s wealth and investment management group, known internally as WIM and includes Wells Fargo Advisors, reported total revenue of close to $4 billion for the quarter ending Dec. 31, an 8 percent increase from the same period a year earlier.
The company reported that net interest income was $856 million, or down 6 percent, due to higher deposit costs, including the impact of increased pricing on sweep deposits in advisory brokerage accounts, partially offset by higher deposit balances.
Also this week, three former Wells Fargo executives were fined a total of $18.5 million for their alleged roles in opening fraudulent bank accounts, the Office of the Comptroller of the Currency said Tuesday, according to the Wall Street Journal and multiple news reports.
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