Wells Fargo reports 12 straight quarters of headcount losses
Despite stepped-up recruiting efforts, Wells Fargo has yet to arrest the downward spiral of its advisor headcount.
The firm reported having 13,723 advisors at the end of the third quarter, down 2% from 14,226 for the same period a year ago. Client assets for the bank’s wealth and investment management business, at approximately $1.9 trillion, were down 1% year-over-year, according to the company.
Wells Fargo, which recently named a new CEO, has suffered advisor attrition since a fake accounts scandal and other alleged misconduct rocked the bank in late 2016. The firm has suffered a net year-over-year loss of advisors for the previous 12 quarters. On a quarter-over-quarter basis, the bank has suffered net advisor losses for eight straight quarters.
The bank’s financial results haven’t surmounted the previous scandals. Wells Fargo took a $1.6 billion expense for litigation related to regulatory fallout. Companywide, net income fell 23% year-over-year to $4.61 billion.
Regional broker-dealers and independent firms have been the chief beneficiaries of the exodus of talent from Wells Fargo. Departing advisors have cited the bank’s scandals, regulatory penalties and bureaucracy as reasons for leaving. Wells Fargo executives have defended the wirehouse’s corporate culture.
Recent departures include a former Wells Fargo team that managed more than $300 million. They went independent with backing from Dynasty Financial Partners in Lee’s Summit, Missouri. And last month, Stifel Financial hired a Wells Fargo advisor managing $350 million. The Los Angeles-based advisor specializes in serving clients in sports and entertainment.
To arrest its attrition, Wells Fargo has stepped up its recruiting efforts, picking up talent from its wirehouse rivals. And earlier this year, Wells Fargo juiced its retirement payments for advisors, adding incentives for advisors to finish their careers at the firm rather than taking a hiring bonus to move to a competitor.
In addition to a new chief executive for the company, Wells Fargo also named a new leader for Wells Fargo Advisors: Jim Hays. He has been with the bank for 14 years and most recently headed its private wealth financial advisors group. David Kowach, who formerly led Wells Fargo Advisors, now serves as head of community banking.
Hays oversees the wirehouse at a time of rapid industry change due to digital innovations and an aging advisor workforce. He is also charged with a new line of business at Wells Fargo, which launched an RIA channel earlier this year. So far, the firm has attracted a handful of advisors from its employee channel.
Wells Fargo operates several wealth management businesses, including a wirehouse, a private bank and an independent broker-dealer.
The wealth management business generated net income of $1.28 billion, up 75% from the year-ago period, according to the bank. Wells Fargo attributed the boost to the $1.1 billion sale of the firm’s Institutional Retirement and Trust business.