Wells Fargo reported higher company-wide earnings for the fourth quarter of 2023, but one department suffered: wealth management.
Overall, the megabank's net income for the quarter was $3.45 billion, a 9% increase over the same quarter in 2022. But its Wealth and Investment Management division took in only $491 million — a 31% drop from the previous year.
Total revenue for the department was $3.66 billion, a 1% decline from 2022. Wells Fargo's chief financial officer, Mike Santomassimo, acknowledged this in a conference call with analysts on Friday.
"Wealth and investment management revenue declined 1% compared to a year ago, reflecting lower net interest income driven by lower deposit balances as customers continued to reallocate cash into higher yielding alternatives," Santomassimo said.
However, the wealth management news was not all bad. Client assets were up by 12%, from $1.86 trillion in 2022 to $2.08 trillion in 2023.
But, tellingly, Wells Fargo did not report its financial advisor headcount. Some analysts see that as a sign that the bank is having a hard time recruiting new talent.
"I certainly expect the wealth management unit to stabilize going forward, but it's no secret that they've struggled with that," said Jason Diamond, a vice president at the financial advisor recruiting firm
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Wells Fargo has faced a number of damaging scandals in recent years. In 2016, regulators found that the bank had opened millions of unauthorized accounts in its customers' names, for which it was
All of this, Diamond said, has hurt the firm's ability to lure in new advisors.
"For a while they couldn't escape the negative headlines," Diamond said. "I think that combined with the usual wirehouse complaints — of bureaucracy and big bank [issues] — made it a difficult story to tell."
In Friday's conference call, Wells Fargo's leadership made few references to their wealth management arm. But when they did mention it, their tone was upbeat.
"While our consumer, small and business banking, commercial banking and wealth and investment management business remains strong, opportunities to increase share are significant," said CEO Charlie Scharf.
For a closer look at Wells Fargo's fourth quarter earnings in 2023, scroll through the cardshow below. To see how the firm did last quarter,