Wealth management profits rose at Wells Fargo even as the firm shed more advisers, the company reported Friday.
Wells Fargo said headcount dropped 3% year-over-year to 14,527 independent and employee advisers. The figure was also down 130 from the 14,657 advisers the firm had at the end of the first quarter.
The company has lost more than 500 advisers over the past three quarters.
The decline comes even as Wells Fargo's main rivals ― UBS, Merrill Lynch and Morgan Stanley ― have cut back on recruiting efforts.
But Wells Fargo has suffered from last year's bogus account scandal, notes recruiter Mickey Wasserman.
"Advisers have long memories," he says.
They're also more interested in going independent or joining regional firms such as Raymond James, says Wasserman, who is based in Agoura Hills, California.
"They're interested in RIAs more than ever," he says.
Yet even as headcount fell this past quarter, profits have risen. Wells Fargo's wealth and investment management unit reported net income increased 17% to $682 million, largely due to higher net interest income and asset-based fees.
Client assets for retail brokerage also rose, increasing 10% to $1.6 trillion. Advisory assets increased 13% to $503 billion.
The company said that noninterest expenses grew $99 million, or 3%, citing broker commissions and other personnel expenses.
CEO Tim Sloan said the company remained committed to further reducing expenses and to mitigating lingering damage from the account scandal by rebuilding trust with customers.
Wells Fargo is the first wirehouse to report earnings. Merrill Lynch and Morgan Stanley report next week.