Wells Fargo is having a hard time hanging onto its advisors, but executives aren’t sweating it.
The bank, whose reputation has suffered due to fake account scandals and massive regulatory fines, reported advisor head count of 14,074 — a drop of 152 from the prior quarter and 490 from the same period a year ago.
Executives, meanwhile, have their eyes on quality, not quantity.
“When we think about FA head count, what we are really focused on is FA productivity,” CEO Tim Sloan said in response to an analyst’s question Friday. “For our existing FA population, we are seeing improvements in loan origination and improvements in the overall size of their books. So there has been some impact from reputation issues. But the important thing is that you see in the overall numbers the improvement of us getting ahead of those reputation issues.”
The bank does not report advisor productivity as part of its earnings release.
Profits are up for the wealth management business, but overall head count has been in a downward spiral.
The firm’s brokerage ranks have declined for seven of the last eight quarters. And the bank has reported a net decline of 1,012 advisors since the third quarter of 2016, when it was first revealed that Wells Fargo’s consumer banking side had opened millions of accounts without customer consent.
Compliance woes have since piled up, resulting in
-
While he inherited a tough job, two years in it’s hard to find a single business metric that has improved,
October 9 -
Industry changes and ongoing bank scandals have tilted the playing field in favor of smaller brokerages.
July 9 -
Two wirehouse advisors left the Charlotte branch one Friday afternoon, for separate firms.
September 5
“You’ve got a bank whose name is in the paper all the time, and not for their charitable work,”
Like De Arcangelis, other advisors have pointed to Wells Fargo’s compliance issues and its corporate bureaucracy as reasons for making a career change. And smaller rivals such as Raymond James, Stifel and Janney Montgomery Scott have become home to dozens of former Wells Fargo brokers.
In the past year, more than 80 advisors left Wells Fargo to go independent and over 200 advisors moved to regional brokerages, according to FINRA BrokerCheck records and company hiring announcements. Those brokers oversaw more than $31 billion in client assets.
Wells Fargo is “seeing attrition beginning to stabilize” and the firm anticipates recruiting efforts to pick up during the fourth quarter, a spokeswoman said in an email.
“Regardless, we never want any advisor to leave us and we all feel the loss. We want every advisor to succeed and feel supported, so they can focus on taking care of clients. We are proud of our first-rate, talented advisors and are confident that our business strategy is working as we keep our focus on the long term,” the spokeswoman said.
On Friday, Sloan said that the drop in head count during the third quarter was partly due to flat hiring efforts. The end of retention deals for A.G. Edwards brokers earlier this year has also been a factor, Sloan said. (Edwards is a predecessor firm of Wells Fargo Advisors.)
Some of the largest teams to leave recently included legacy A.G. Edwards advisors, some of whom have said they miss the regional BD’s culture and more accessible leadership.
“If you called the home office with a question, the person you got either knew the answer or would help you quickly get to the person who does,”
Coyle had worked at Edwards from 1996 until its eventual absorption into Wells Fargo in 2008. He moved his $500 million practice to Steward Partners last week.
Dynasty, Raymond James and Stifel are among the biggest beneficiaries of recent advisor moves.
Still, even with departures such as those of De Arcangelis and Coyle, Wells Fargo’s wealth and investment management unit was profitable during the third quarter. The business reported net income of $732 million, up 2% year-over-year, and boosted in part by lower taxes.
Client assets for the bank’s retail brokerage rose 2% to $1.6 trillion, the firm reported. Boosted by higher market valuations, advisory assets rose 7% to $560 million.
Net interest income for wealth and investment management, which includes business from lending, was down 6%, falling to $1.1 billion. The firm said client balances have been moving into higher-rate alternatives.
Meanwhile, Wells Fargo has moved ahead with plans to
Sloan told analysts his team is making progress.
“I’m confident that these changes are building a better Wells Fargo for all our stakeholders,” he said.
