Will Wells Fargo have its Field of Dreams moment?
The firm has built a new RIA channel, partnering with TradePMR to offer back office support, technology and custody services. Now, the question is whether advisors will come.
One advisor already has — an existing Wells Fargo broker who transferred over earlier this month. Executives anticipate more will follow suit, pointing to the rapid growth among independent advisors in recent years. The growth has been driven in no small part by shifting client preferences and a wave of wirehouse breakaways who have opened independent practices in the past decade.
“We want to attract the industry’s most talented advisors when they are in motion and evaluating their options,” says Wells Fargo Advisors’ Head of First Clearing John Peluso.
With its RIA play, the bank is targeting advisors who are 100% fee-based, have $100 million or more in AUM and are either already independent or wish to be.
The offering is also available to advisors currently operating in Wells Fargo’ other business units. Advisors who fit the desired profile “can have access to be sponsored, for lack of a better word, to do their due diligence,” Peluso says.
However, a wirehouse advisor moving to the firm’s RIA channel would forego their deferred compensation, a spokeswoman confirms. That, combined with the requirement of a pure fee-based practice, may discourage some of its own brokers from exploring a move.
“If they made it hybrid, they’d be casting a much wider net. That would risk cannibalizing their existing advisor force,” recruiter Mark Elzweig says.
Advisors report what they love — and hate — about tech at companies holding client assets.
Like other wirehouses, Wells Fargo has seen a number of employee channel advisors split to form independent practices. Indeed, the bank’s independent broker-dealer unit has also picked up a few breakaways from wirehouse competitors. Overall headcount, however,
The bank has been working to address regulatory and compliance issues with mixed results. Still,it may not impact Wells Fargo’s ability to attract RIAs, according to Elzweig.
“Bad reputations is a temporary state of affairs on Wall Street,” Elzweig says. “They have a lot of capabilities that they could offer RIAs, such as banking. I think they could attract established RIAs, and I think they could especially attract people from smaller independent broker-dealers.”
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Indeed, Wells Fargo is banking in part on its technology offering and that of TradePMR to incentivize advisors to sign on. (Wells Fargo updated its Envision planning software last year to add more interactivity for advisors and clients.)
TradePMR already offers brokerage, custodial and technology services to more than 700 advisors, according to the the Gainesville, Florida-based firm. It’s had a relationship with Wells Fargo’s First Clearing since 2011, and the two firms’ expanded partnership is a result of years of discussions, according to executives.
TradePMR was founded by a former advisor, CEO Robb Baldwin. “I started an RIA 25 years ago when custody options were fairly limited. There was a lot missing in the marketplace,” Baldwin says, providing an opening for his firm.
For Wells Fargo, the RIA space was the final section of the wealth management marketplace where the firm didn’t already operate. The bank has had advisors working in several different channels: wirehouse, independent broker-dealer, private bank and more.
“Now we offer this last piece of the puzzle,” Peluso says.
