Wells Fargo Lost Over 200 Brokers in Fourth Quarter
Wells Fargo Advisors’ brokerage force dipped below 15,000 during the fourth quarter, a net loss in the three months of 204 that the bank said reflects its attractive retirement program and that recruiters said is fallout from its parent’s retail banking scandal.
Wells ended 2015 with 14,882 brokers across its private client, independent brokerage and in-bank brokerage channels, the San Francisco-based bank company said Friday as it . The brokerage unit, which crossed the 15,000-advisor threshold in last year’s first quarter, is part of the company’s wealth and investment management division, the smallest of its major businesses.
Wells reached a $185 million settlement in September with regulators for creating retail banking and credit card accounts that customers had not authorized, triggering Congressional hearings, the resignation of the bank’s chief executive and a marketing campaign to modify the bank’s reputation as a sales-driven behemoth with little regard for clients.
The company’s wealth division had not been implicated in the scandal, although the bank has long boasted about brokers’ success at cross-marketing bank loans and deposit accounts to their clients. Some brokers privately said that customers were grilling them about the scandal, and recruiters acknowledged that moving people to Wells had become a tough sell.“Anytime you have big news like that, it [recruiting] is going to drop,” said Rick Rummage, a recruiter in Herndon, Va. “It definitely has hurt them.”
A Wells Fargo Advisors spokeswoman said the decline in brokers had been anticipated for more than a year as many veterans have been taking advantage of a multi-year retirement program in which they transfer their books to younger colleagues.
“We have an industry-leading transition program in place as a way to prepare for financial advisor retirement while ensuring we transition our clients in such a way that we retain them,” she said. “[That] has been the case in the majority of these conversions.”
The loss of Wells brokers contrasts with Bank of America’s announcement Friday that its Merrill Lynch brokerage division reversed a multi-year decline by adding 76 brokers in the fourth quarter, some of whom graduated from its training program. Merrill ended the year with 14,629 brokers.
Morgan Stanley, the biggest broker by salesforce size, reports its results and end-of-year numbers next week.
Despite the headcount decline at Wells, its wealth division posted year-over-year improvements in revenue, net income and assets under management in the fourth quarter.
Revenue of $4.07 billion grew 3% from the end of 2015 while profit was up by 10% to $653 million. Assets under management jumped 7% to $1.7 trillion as a result of stronger markets and asset-gathering, the bank said.
Although Wells Fargo CEO Timothy J. Sloan said during a conference call that rebuilding trust with customers, employees and shareholders will take time, he singled out David Carroll, head of the wealth and investment management division, for his successful efforts amid the crisis.
“David and team did a terrific job last year,” Sloan said. “When you think about growing that business 10% year-over-year, we couldn’t be more pleased with the performance.”
In releasing results, Wells Fargo continued to omit the wealth division’s cross-sell ratio that it had flogged prior to disclosure of the fake-account scandal. The wealth unit’s sales of 10 products per household surpassed those of the bank’s largest divisions for several years.
In this year’s fourth quarter, Wells brokers continued to increase their sales of loans, deposits and other bank products. Average customer loans rose 11% to $70 million from the year-earlier period, and net interest income for the wealth division was up 14%.
–David Peterson contributed reporting.