Talent fight erupts as Wells Fargo exits foreign wealth business

A race for talent is heating up as Wells Fargo & Co. winds down the roughly $40 billion international segment of its wealth management business, with several firms competing to scoop up advisers and their lucrative client lists.

UBS Group and Banco BTG Pactual are among firms seeking to hire from Wells Fargo’s pool of about 330 advisers who were part of the international wealth business, according to people with knowledge of the matter, as are Insigneo and Andbank. Some banks are even offering an advance on two years of pay, as a forgivable loan, to try to persuade top bankers to join and stay for 10 years, said one of the people, who asked not to be identified because the information isn’t public.

“When the news broke back in January, the floodgates opened,” said Daniel de Ontanon, chief executive of Miami-based Insigneo. “We’ve been talking to a number of them, and we expect to be the next firm for many of them. It’s hard to say exactly how many because basically all of them are still waiting for a number of things to be defined on their end.”

Morgan Stanley also is seeking to hire from Wells Fargo, Citywire reported last month. Spokespeople for Morgan Stanley, UBS and BTG Pactual declined to comment. Carlos Gribel, who runs fixed income at Andbanc Brokerage in Miami, confirmed Andorran private bank Andbank’s interest in attracting advisers from Wells Fargo.

Wells Fargo told staff in a memo on Jan. 7 that it was planning to exit the international segment of its wealth business. Under CEO Charlie Scharf, Wells Fargo is focusing on serving U.S. consumers and small businesses as part of his quest to simplify the company. It said it would stop opening new brokerage, private bank and Abbot Downing accounts for anyone living primarily abroad starting Jan. 19. The Abbot Downing unit focuses on ultra-high-net-worth investors.

PIECEMEAL PROCESS

The announcement came as a surprise to some Wells Fargo employees and competitors who didn’t understand why the bank opted to wind the segment down in a piecemeal way instead of selling it off, some of the people said.

A month later, some advisers still don’t know some terms of their dismissal from Wells Fargo, such as whether promissory loans will be forgiven or deferred compensation will be accelerated, two of the people said. A person familiar with Wells Fargo’s process said the firm will offer accommodations on a case-by-case basis, such as forgiving transition loans and accelerating deferred compensation. Wells Fargo told employees the process would take roughly nine months.

In the meantime, the competition has gotten so intense that some smaller firms which had initially planned on hiring some advisers have stepped away because doing so became too expensive, one of the people said.

[More: Wells Fargo reports another sharp annual decline in advisers]

OFFER REBUFFED

Insigneo is in talks to hire around 40 international advisers managing assets of $5 billion, de Ontanon said. The move would allow the advisers to start their own independent businesses at the international brokerage and advisory firm.

Last month, Insigneo approached Wells Fargo about a bulk transfer deal that would make it easier for a greater number of advisers and their clients to move onto Insigneo’s platform, but the offer was rebuffed, he said.

“Their goal is to not have any non-U.S. client on their books,” de Ontanon said. “In our experience, that can be a multiyear process because clients don’t leave that easily and some of them may have complex structures that they use to manage their investments. There’s a better way to do it.”

Wells Fargo said it’s “focused on meeting our regulatory requirements, managing risk and simplifying operations across the company.”

The firm will work “individually” with international advisers on their options, spokeswoman Shea Leordeanu wrote in an emailed statement. “For those who concentrate on international, we expect this group will find new opportunities at other firms.”