Wells Fargo headcount drops below 14,000 advisors
Advisor headcount slipped again at Wells Fargo, which has suffered from attrition since a phony accounts scandal came to light in 2016.
The firm’s advisor ranks declined to 13,968 from 14,544 for the same period a year ago. That represents a 4% decline, or a net drop of 576 brokers, according to Wells Fargo’s fourth quarter earnings report issued Tuesday. Headcount has dropped a net 1,118 brokers since the third quarter of 2016.
Like its competitors, Wells Fargo has had to deal with an aging advisor force. It's also had to deal with an exodus of talent, as a slew of brokers have quit the troubled bank for regional brokerages and independent firms, attracted by what they claim is the greater flexibility of those business models.
A Wells Fargo spokeswoman said that attrition slowed during the fourth quarter and that the average productivity of the advisors who did leave Wells Fargo was only half that of the bank’s current average broker. She declined to specify what the firm’s average productivity is.
She added that the company is also concentrating on cultivating next-gen talent. That could help replenish its diminished ranks.
Recently announced plans to expand its wealth management arm by adding an RIA channel this year could also help Wells Fargo. The move would make it the first wirehouse to launch such a business. It would also help the wirehouse retain the assets of breakaway brokers; all four wirehouses have seen top talent walk out the door to open their own independent practices.
“We want to build a platform of products and services that is the best in the industry. We have to be open to how the model will change over the next decade,” David Kowach, president of Wells Fargo Advisors, told Financial Planning in December.
Wells Fargo will pilot test the program in several cities this year, Kowach said.
The bank’s wealth management unit already includes several businesses, such as its wirehouse, private bank, independent broker-dealer and Abbot Downing.
Executives told analysts during an earnings call Tuesday morning that market volatility during fourth quarter impacted results. Client assets for the retail brokerage arm declined 10% year-over-year to fall to approximately $1.5 trillion, according to the company. Advisory assets also fell, slipping 8% to $501 billion.
The company attributed the drop to lower market valuations and outflows.
Net income for the bank’s wealth management unit rose 2% year-over-year to $689 million. Net interest income and noninterest income both fell year-over-year, but the declines were offset by lower expenses, the firm said.