Wells Fargo Asset Management rebrands with new CEO

Legg Mason vet Joe Sullivan is bullish on the future of Allspring Global Investments. The $604 billion asset management arm of Wells Fargo & Co. is being acquired for $2.1 billion by GTCR and Reverence Capital Partners.

Wells Fargo Asset Management, which is being acquired by two private equity firms, is getting a new name and a new chief executive.

The $604 billion asset management arm of Wells Fargo & Co., which is being acquired for $2.1 billion by GTCR and Reverence Capital Partners, will be renamed Allspring Global Investments when the deal closes later this year.

The transition also includes replacing CEO Nico Marais with Joseph Sullivan, the former chairman and chief executive of Legg Mason.

According to a company statement, Marais, who has been the CEO since June 2019, will retire when the transaction closes, but will continue to serve Allspring as a senior adviser.

“When Nico made the decision to step down, the sponsors had a new challenge and they came to me, it was recently in the past few weeks that it was discussed,” said Sullivan, who was originally slated to step into the role of executive chairman of the board once the asset management business was fully independent from Wells Fargo.

Sullivan, 63, brings to Allspring more than 40 years of industry experience.

He served as chairman and CEO of Legg Mason from 2012 until its acquisition by Franklin Templeton in July 2020, and had been working as a senior adviser to Franklin Templeton President and Chief Executive Jennifer Johnson.

Sullivan joined Legg Mason in 2008 and, after serving as head of global distribution and chief administrative officer, was appointed interim CEO in 2012.

Before joining Legg Mason, Sullivan served on the board of directors of Stifel Financial and as executive vice president and head of fixed-income capital markets for Stifel Nicolaus from December 2005.

Previously, Sullivan held executive roles at prominent financial firms including Legg Mason Wood Walker, Dain Bosworth and Piper Jaffray.

Allspring, which technically does not yet have have a corporate headquarters, will have up to 90 days after the acquisition is complete to remove any branding references to Wells Fargo.

But that might be the easy part, said Sullivan, who described Allspring as “a bit of an empty vessel,” because “it doesn’t come with any kind of history.”

Part of the history Allspring will be separating from includes associations to some of the Wells Fargo & Co. parent company’s highly publicized violations of cross-selling and pushing products on sometimes unwitting customers.

“We have done a good amount of business with Wells Fargo Advisors, and we expect we should be able to do more with them,” Sullivan said of Allspring’s potential.

Todd Rosenbluth, director of mutual fund and ETF research at CFRA, acknowledged the asset manager’s significant footprint in the mutual fund space, specifically citing the $6.4 billion Wells Fargo Growth Fund (SGRAX) and the $2.2 billion Wells Fargo Opportunity Fund (SOPVX).

“The firm has some appealing actively managed equity products to build off, but will have to establish a distinct identity as Wells Fargo has an established brand that will not be leveraged in the future,” Rosenbluth said.

Sullivan recognizes and appears to embrace the challenge of bringing a new brand with lots of assets under management into the marketplace.

“We’re a scaled business that is nicely diversified with liquidity, fixed-income and equity strategies,” he said. “Our short-term focus will be to make sure we get appropriate market share in areas we have very compelling investment performance where we’re not getting what we believe is our fair share. That’s easy, that’s organic growth, and we see a clear path doing that.”

Beyond that, Sullivan anticipates adding capabilities in the alternative investments space and international strategies.

“Nobody is satisfied with where we are,” he said. “Being Allspring, and having a new brand and being a stand-alone pure play asset manager, all will prove to be tailwinds.”

The asset manager remains one of the few large-scale fund complexes without a presence in the fast-growing exchange-traded funds space, and Sullivan said Allspring’s move in that direction will be deliberate and not just done for the sake of offering products already on the market.

“The vast majority of flows in ETFs are in the passive space, and we’re not going to play in that game,” he said. “That’s a BlackRock, State Street and Vanguard game. It’s a commodity business. There’s no upside for us in trying to compete in that space.”

However, Sulllivan added, actively managed ETFs might be an area where Allspring can leverage some of its asset management prowess.

“That’s one of the things we have to decide,” he said. “We believe having choice as far as vehicle wrappers is important. Not having ETFs is probably a miss, but I think we need to talk about that.”