Wells Fargo nods to bank-based advisors for $16B in inflows

Advisors in Wells Fargo's bank branches helped bring in $16 billion in new assets in the first quarter, CEO Charlie Scharf told analysts Tuesday.

Discussing his firm's second-quarter earnings, Scharf said the number of advisors working out of Wells Fargo's bank branches had increased by about 10% from a year ago. He did not provide a total number for the firm's branch-based advisors, and Wells Fargo has not reported an advisor headcount since early 2023, when the tally stood at around 12,000 advisors.

Scharf has talked in previous quarters about how closer ties between bank-based advisors and consumer bankers are helping to bring assets into the firm's "premier" channel, which is for clients with at least $250,000 to invest.

"The improved collaboration between our bankers and advisors has helped to drive over $16 billion of net asset flows into the Wealth and Investment Management Premier channel during the first half of the year, up over 60% from a year ago," Scharf said in the firm's earnings call. "Deposit and investment balances from Premier clients have also been steadily increasing and were up approximately 10% from a year ago."

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Wells Fargo's assets, net revenue and net income

Those inflows helped drive Wells Fargo's asset total for its wealth and investment management segment up by 7% year over year to nearly $2.35 trillion. Of those assets, just over $1 trillion were held in advisory accounts, a figure up 10% year over year. And $1.3 trillion were in brokerage and other types of accounts, up 4% year over year.

The wealth and investment management segment's net revenue rose by 1% year over year to nearly $3.9 billion. Wells Chief Financial Officer Michael Santomassimo told analysts Tuesday that "growth in asset-based fees driven by higher market valuations was partially offset by lower net interest income due to the impact of lower rates."

Meanwhile, the segment's noninterest expenses were up by 2% year over year to $3.25 billion. Wells Fargo reported $480 million in net income for its wealth and investment management unit, a figure down 1% year over year.

Lifting of the asset cap

Scharf acknowledged early in the call that the second quarter marked a "pivotal milestone in our transformation" after federal regulators lifted a punitive asset cap placed on Wells Fargo for opening millions of fake accounts for customers. The cap had set a limit of $1.95 trillion on assets held in Wells' banking business, putting it at a decided disadvantage to its competitors.

Scharf did not specify any way the lifting of the cap would help Wells Fargo's wealth management business in particular, but rather how the firm would benefit in a broad sense.

"You're going to see more aggressive marketing," he said. "You're going to see more merchandising in our branches. You're going to see more local advertising as well as national advertising, as well as just expansion of footprint in areas where we think we have room to grow. And so, those are all things that we have been very, very cautious about doing up until now. And with the value proposition that we have for our customers and the strength of the brand and the great quality of the people here, we think we'll be able to compete very effectively."