Regional brokerage firms can thank just one wirehouse for many of their new hires this year.
Of the 133 wirehouse advisors who jumped this year to smaller regional firms, about 60% came from Wells Fargo, according to hiring announcements data analyzed by On Wall Street.
That is nearly double the percentage for the first six months of 2017, when Wells Fargo brokers comprised 33% of the 126 wirehouse advisors moving to regional firms.
These numbers likely understate the number of advisor moves and their AUM, given not all firms make hiring announcements and release information about AUM. These figures also don't include advisors who may have retired or taken jobs outside the industry. Plus, some firms delay announcing new recruits, sometimes for up to several weeks after brokers change their registration.
Still, hiring announcements for 2018 indicate that regional firms' recruiting is strong due to a shifting industry landscape that has tilted the playing field in their favor.
"There's now very little difference in the capabilities of big firms and small firms. So it comes down to culture," recruiter Danny Sarch says.
On that score, regional firms have benefited from what some advisors see as an overbearing wirehouse bureaucracy. These brokerages are seen as offering advisors more flexibility and freedom to run their practices as they see fit, recruiters say.
At the same time, Wells Fargo's internal challenges have also motivated moves out of that firm. Wells Fargo has suffered from intense regulatory scrutiny related to scandals on its consumer banking side, including the opening of millions of accounts without customer approval. That scandal cost John Stumpf his position as CEO. It also cost
"Advisors are, in my opinion, among the smartest animals in the forest. If they see a fire, they head for a safe haven," Sarch says.
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The firm pulled in 11 new advisors in the first quarter of 2018, building on the 65 brokers hired last year.
April 12 -
Advisor exodus from beleaguered firm shows no sign of abating in 2018
June 13 -
"If our profession truly cares about the well-being of our clients to the extent that the profession professes, then we need to swing this pendulum in the other direction," Elwyn says.
April 13
A Wells Fargo spokeswoman declined to comment, noting the firm was in a quiet period before
The bank's previous earnings reports have shown a decline in head count.
Some brokers who have departed Wells Fargo in recent quarters were previously with A.G. Edwards, a regional brokerage with a history that stretched back to the 19th century and which was acquired by Wells Fargo via Wachovia during the financial crisis.
"A lot of A.G. Edwards people were never happy being at a big firm," recruiter Bill Willis says.
Plus, Willis notes, if you are a Wells Fargo team ready for a career change, moving to another wirehouse may not be as attractive an option as moving to a regional BD right now.
Morgan Stanley, UBS and Merrill Lynch have all cut back on their recruiting efforts in the past two years. In addition, Morgan Stanley and UBS quit the Broker Protocol last year, reducing their attrition and potentially diminishing their appeal to possible recruits.
Other firms have remained committed to the protocol, an industrywide accord that permits advisors switching employers to take basic client contact information with them.
While Raymond James and Stifel are on hiring sprees, Wells Fargo is still losing talent.
Should more firms exit the protocol, it could slow recruiting moves industrywide.
Despite its challenges, Wells Fargo has not stopped its own recruiting efforts. Since the start of the year, it's recruited at least 17 new brokers overseeing more than $1.8 billion to both its employee and independent channels. Wells Fargo does not always publicize its new hires.
Those new recruits may help offset losses, and as the bank gets further away from past scandals, its recruiting may pick up again.
But how long that may take is open to question.
"The other wirehouses have had their fair share of scandals. But Wells Fargo seems to have fallen the most," Sarch says. "After the financial crisis, they had an unimpeachable reputation. That's not the case anymore."
