Wells cuts payout to recruiters: Headhunters

Headhunters say Wells Fargo is cutting its payout to recruiters. Andrew Osterland looks at what this rejiggering may mean for wirehouse reps.
NOV 21, 2012
Wells Fargo Advisors is cutting its fees for recruiters who bring financial advisers to the bank's three adviser channels, recruiters say. The industry standard for recruitment contracts is 6% of the adviser's trailing 12-month production. But Wells has been offering recruiters a major incentive with a staggered fee structure significantly higher than the industry average. Formerly, Wells had paid 6% for advisers with less than $400,000 in production but 10% for those with production between $400,000 and $750,000. It paid 6% on production over the $750,000 threshold. The company plans to cut the midtier fee to 8%, according to recruiters. One recruiter also said Wells planned to cut recruiter payouts for advisers going to the bank channel (as opposed to the private-client group or independent channel) to a flat 6%, as they tend to bring a lower percentage of their clients with them. Wells Fargo spokeswoman Erica S. Van Ross declined to comment. Wells has been on a recruiting roll since August, bringing in 24 advisers managing a combined $2.2 billion. That could change. “I think you'll see a significant impact on lead flow to Wells from this,” said Ron Edde, director of recruiting for Millennium Career Advisors Inc. Some headhunters aren't startled to see the 10% payout cut, and they don't expect it to hurt Wells significantly in the recruiting community. “It was nice getting that 10% payout, but I'm surprised they kept it in place for as long as they did,” said recruiter Mindy Diamond, who does a significant amount of business with Wells. “We won't be sending any fewer leads to Wells because of the reduced fee.” Another, who asked not to be identified, said the change wouldn't affect his behavior, either. “They've always paid more. Now they're not going to pay quite as much more,” he said. “It may affect their business some, but they're still No. 1 in payout.” One recruiter viewed the move as a first step to cutting out external firms altogether, saying that Wells could make an internal hire to leverage information from the 800 recruiters it currently works with.

Latest News

Ugly fight between Mariner and advisor grows more foul
Ugly fight between Mariner and advisor grows more foul

It’s a ruthless competition for advisors right now, with buyers promising top dollar to advisors willing to sell.

Wealthtech vendors embed AI agents deeper into advisor workflows
Wealthtech vendors embed AI agents deeper into advisor workflows

Vanilla, SS&C and FinTurk are rolling out a mix of agentic and AI-assisted features aimed at planning gaps, client insights, and manual account monitoring.

Carson, Commonwealth veteran joins estate planning firm Hargrove
Carson, Commonwealth veteran joins estate planning firm Hargrove

David Haughton, formerly of Carson Group and Commonwealth Financial Network, takes on VP of engagement role at Hargrove MSO, a subsidiary of Hargrove Firm.

Advisors face fiduciary blind spot as PEP adoption accelerates
Advisors face fiduciary blind spot as PEP adoption accelerates

Retirement plan clients may not grasp what fiduciary duties they keep when joining a PEP.

OnePoint BFG, Modern Wealth expand Florida presence
OnePoint BFG, Modern Wealth expand Florida presence

OnePoint BFG has added a $400 million team from Northwestern Mutual while Modern Wealth scooped a veteran-led team overseeing nearly $710 million in assets.

SPONSORED Direct indexing webinar targets tax-loss harvesting amid market swings

Northern Trust’s Ken Lassner shows advisors how to convert volatility into after-tax portfolio gains

SPONSORED Who builds the income when the pension disappears?

Dan Biagini of American Equity says the steady decline of pensions, longer lifespans and a reset in interest rates are rewriting how advisors build retirement income