Wells Fargo Advisors joined peers
That cost-cutting move may have a negative impact on the firm's goal to
"If that's your goal, you're typically not saying, let's reduce the number of field leaders that we have," Frank LaRosa, CEO of industry consulting firm Elite Consulting Partners, said in an interview. "When they take strong leaders out of the field, and stick them in a more management, corner office, out-of-the-field scenario, that impacts and hurts the field."
The
"Executing with more consistency across the country will power our growth and deliver the best experience for our clients," Sol Gindi, the head of Wells Fargo Advisors, said in
Several regional division leaders will be eliminated in the change. While they remain with the company, their future plans have not been confirmed yet, the spokesperson said. They include Rich Getzoff, who led the Eastern division; Susan Mayo, who led the Northern Division; Kent Caldwell-Meeks, who led the Midwestern Division; and Joel Glasco, who led the Southern Division.
Longtime Wells Fargo veterans Mike Carroll and Alberto Gonzalez Saint Geours will continue leading the Northeast Division and Southeast Division, respectively, and Dave Altshuler will stay as leader of the Western Division, according to the press release.
Heather Hunt-Ruddy, the head of national sales at Wells Fargo Advisors, will lead the new Central division. In her former role, Hunt-Ruddy was responsible for
The moves signal less support for advisors and could be a dampener on talent recruitment, LaRosa said.
"They say that they want to recruit. They say that they're advisor-focused, but all of their actions are the opposite of that. All their actions are about efficiencies, cutting costs," he said.
A strong recruiting director can be "really helpful [to] bring on advisors, get deals structured, get the firm organized for the transition — just helping an advisor go through this recruiting process to onboard," LaRosa added.
Take all that away, and it may be hard for staff to adjust to a new person who has a new style and potentially lacks that expertise.
But this move is likely to save big on expenses in the near term, LaRosa said. It's easier to target field leadership, he said, than to cut advisor pay or lay off advisors.
"If the average regional director is making, let's say, a million dollars a year, and you can cut that by four or five regional directors or 10, that's a huge savings," LaRosa said.
He added that moving those people into other roles could mean lower bonus structures for them and potentially lining them up to take on responsibilities of other individuals who would be made redundant down the line.
Jodie Papike, the president of advisor recruiting firm Cross-Search, agreed that generally having more field directors helps with recruitment.
"When you look at firms, across the board, the firms that recruit the most always have the most recruiters," she said.
But for now at least, firms in this situation could maintain operational efficiency even without the former field leaders by bringing on more support staff to do some of the grunt work left behind, Papike said.
"The busy work, the follow up, their scheduling of calls, things like that," could be replaced for now, she said. "So you can actually have less people at the top with just as much efficiency."
Papike said she couldn't determine yet if the moves would affect recruiting numbers going forward and acknowledged it was possible that the restructuring was made based on simply responding to market results that indicated shifting geographies would be more efficient.
"Whenever I see companies readjusting territories, it's for good reason. It's because there are different levels of opportunity in different states," she said.
Jeff Nash, the CEO and co-founder of advisor transition consulting firm Bridgemark Strategies, agreed with LaRosa that the moves were likely intended as preventive cost-cutting, in anticipation of worsening market conditions and a possible recession.
"This is very similar to how it looks during different recessions. What we see is the top producers, the top 20% of advisors, those ones they want to keep happy," he said. "But everything else is on the table… the initial layoffs are always around support."
Other layers of administrative staff could follow when that happens, he said.
Reached for comment about the shakeup's possible impact on its recruiting, Wells Fargo declined to respond on the record, but said that in a recent Barron's interview, Gindi said his strategy was to "have everyone reporting up to one leader," which he believed would be effective and continue the firm's recent headcount improvements.
