Wells Fargo loses more than 450 advisers in 2019
Expenses also increased at Wells Fargo Advisors, and the firm lost a clearing client
Wells Fargo Advisors’ head count continued to drop at the end of last year, with the firm reporting 13,512 financial advisers at the end of December, a drop of 456 — or 3.3% — over the twelve months of 2019.
While some of those advisers moved to competing firms, others retired and left the industry, company spokesperson Shea Leordeanu noted in an email.
Compared to the quarter ended in September, Wells Fargo Advisors reported a decline of 211 financial advisers.
Meanwhile, during a conference call with analysts to discuss fourth-quarter earnings, the recently hired CEO of Wells Fargo & Co., Charles Scharf, said the bank must act with “urgency” and has “a lot to figure out” as it attempts to work through a number of problems that have dogged the company since 2016.
That’s when Wells Fargo & Co., the parent of Wells Fargo Advisors, reported that bank employees had secretly created millions of unauthorized accounts in the names of customers without their consent. The bank was fined $185 million and then-CEO John Stumpf resigned. Myriad bank-related scandals followed.
In its earnings report, the bank’s Wealth and Investment Management group, which includes the adviser business, reported net income of $435 million for the final quarter of 2019, a decline of 63% when compared to the same period a year earlier.
Noninterest expenses were up $685 million, or 23%, primarily driven by higher employee benefits expense from increased deferred compensation plan costs, higher operating losses and higher equipment expense related to the strategic reassessment of technology projects.
The company reported “$166 million of expenses related to the strategic reassessment of technology projects in Wealth and Investment Management, predominantly equipment expense,” and “net outflows” in its clearing business, which was formally First Clearing and is now branded Wells Fargo Clearing Services.
More than three years after the initial scandals, the bank’s image remains tarnished among financial advisers, said Danny Sarch, an industry recruiter.
“Rebranding First Clearing to Wells Fargo Clearing doesn’t look like the smartest thing in the world right now,” he said.
Ms. Leordeanu said that the firm lost a client “who decided to use clearing services elsewhere” but declined to state the total net outflows of that client. Total client assets in the Wealth and Investment Group at the end of 2019 were $1.9 trillion, an increase of 10% year-over-year.
The S&P 500 posted a yearly gain of more than 31% in 2019, including dividends. By contrast, Wells Fargo’s share price rose 17.7% last year, opening 2019 at $45.53 and closing the year at $53.60.
Ms. Leordeanu said that 2019 was the firm’s best year in recruiting financial advisers since 2016, but gave no information about the exact number of advisers who joined last year. However, she did note that advisers joining the firm had 40% more in annual fees and commissions than the Wells had anticipated.
The average annual fees and commissions for new hires in 2019 was $719,000, compared to an average a year earlier of $565,000, she added.
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