In keeping with its message that its financial advisor work force is steadying after years of upheaval, Wells Fargo Advisors on Wednesday released details of its 2025 incentive compensation plan for its wealth management, employee advisors.
The message from the wirehouse when it comes to pay is consistency, with the firm disclosing that there was no change to its grid, or the pay system based on a financial advisor’s production of revenue through sales and fees charged to clients, according to a presentation provided by Wells Fargo to InvestmentNews.
For the fourth year in a row, the firm in 2025 will use a single monthly target of $13,500 as a benchmark for advisor pay. The below-hurdle grid rate is 22%, or 22 cents per dollar of revenue. Revenue above that rate will generate a 50% grid rate, or 50 cents per dollar of revenue, for the advisor.
Wirehouse advisors like those at Wells Fargo Advisors are, on average, the highest earning in the industry, routinely generating at lest $1 million if not more in total fees and commissions annually.
Meanwhile, Wells Fargo Advisors is adding some sweeteners next year to boost potentially financial advisor compensation, including a $500 incentive or bonus for referring clients to open a checking account, according to the presentation.
The firm said there was also no changes to expense allowances for financial advisors but is making changes around the edges: it is introducing higher requirements for small accounts and experienced financial advisors working with less wealthy clients. For example, it is lessoning its payout on households with less than $250,000 in assets next year.
Mike Santomassimo, the bank’s chief financial officer, at an industry conference in September, said the wirehouse had turned the tide on financial advisor attrition after years of watching advisors jump to competitors or retire in the aftermath of well documented bank scandals.
“For the fourth year in a row, we are keeping our core grid the same,” wrote Sol Gindi, Head of Wells Fargo Advisors, in an email. “Our commitment to ensuring our compensation is consistent, easy to understand, and rewards growth is one of the main reasons that we continue to see low levels of attrition and bring over some of the industry’s top talent,” adding that advisor hiring is up more than 50% compared to last year so far in 2024.
Wells Fargo & Co. has hired Gindi and other senior executives from JPMorgan Chase & Co. over the past several years to revamp Wells Fargo’s wealth and investment management group, noted one well-placed industry observer.
“There’s little doubt in my mind that the tide has turned,” said the industry observer, who asked to speak confidentially to InvestmentNews. “Advisors from the banks are coming to Wells Fargo to find out more. They’re saying, you have people from JPMorgan running the place, so we’re interested.”
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