Wells Fargo Advisors continues to see a decline in the number of brokers and advisers working at the firm's various channels, reporting on Friday morning
a net loss of 173 registered reps — or 1.2% of its total adviser sales force — during the second quarter of this year.
Meanwhile,
Wells Fargo also said that it had set aside $114 million related to the review of fee calculations within certain accounts in the investment and fiduciary services businesses that had an impact on some wealth management and private banking clients. This issue
was initially revealed in March.
Higher net worth clients typically have these types of accounts and Wells Fargo has suspended fees for some of these wealthy clients' accounts.
The retail brokerage unit of Wells Fargo began to hemorrhage advisers in the second half of 2016; that September, the parent company revealed a scandal in its retail banking that resulted in Wells Fargo being fined $185 million for opening banking accounts for a few million customers without their knowledge or approval.
Some Wells Fargo reps and advisers have retired and others have jumped to competing firms,
including independent broker-dealers. Over the last 21 months, Wells Fargo Advisors has seen a 5.7% decline in its adviser workforce, falling from 15,086 individuals in September 2016 to 14,226 at the end of June.
In the past 12 months, the firm has seen a decrease of 301 advisers, or 2% of its total. The majority of those, about 80%, were retirements, said Wells Fargo spokeswoman Shea Leordeanu.
When asked about advisers leaving the firm during a conference call with investors on Friday morning, Tim Sloan, the CEO of Wells Fargo & Co. said that he "wouldn't describe it as a concern on our part."
"The overall quality of financial advisers has increased a bit," Mr. Sloan said, adding that Wells Fargo Advisors is facing the challenge of its reps and advisers getting older, which is a hurdle for the industry as a whole.
Mr. Sloan said that up to 40% of the firm's advisers leaving in the most recent quarter had retired. Meanwhile, a payment to advisers acquired in the purchase of A.G. Edwards Inc. in 2007 by Wachovia Corp. had recently expired, freeing some brokers to look for another employer. Wells Fargo bought Wachovia during the credit crisis.
Ms. Leordeanu said that the firm had a strong pipeline of recruits and that the number of adviser retirements had "ramped up" during the second quarter.
Wells Fargo's Wealth and Investment Management group, of which Wells Fargo Advisors is a part,
reported net income of $445 million, down $269 million, or 38%, from first quarter 2018.
Revenue of $4.0 billion decreased $291 million, or 7%, from the prior quarter, primarily due to the impairment from the announced sale of an asset manager RockCreek, as well as lower transaction revenue and asset-based fees.
