Wells Fargo to open RIA offices in a wirehouse first
LAS VEGAS — The growth of the independent channel has been so impressive in recent years that even a wirehouse wants to get in on the action.
While he inherited a tough job, two years in it’s hard to find a single business metric that has improved,
Industry changes and ongoing bank scandals have tilted the playing field in favor of smaller brokerages.
Two wirehouse advisors left the Charlotte branch one Friday afternoon, for separate firms.
Wells Fargo will open several RIA offices around the country next year, according to David Kowach, president of Wells Fargo Advisors.
The move would set Wells Fargo apart from its wirehouse competitors, which do not operate in the independent space.
And it might help the bank offset losses that it and its wirehouse rivals have suffered in recent years as a slew of elite brokers have quit to open their own RIAs, often with the help of firms such as Dynasty Financial Partners, HighTower Advisors and Focus Financial.
In a keynote presentation on the future of financial planning at the annual MarketCounsel Summit, Kowach said that Wells Fargo would “test the RIA business.”
He expanded on the matter in an interview afterward with Financial Planning, saying the bank will experiment with opening RIA offices “in a few cities” in 2019.
Wells Fargo already has more than 14,000 advisors operating in its bank branches, wirehouse broker-dealer, private bank and independent broker-dealer unit, Wells Fargo Advisors Financial Network, also known as FiNet.
“We want to build a platform of products and services that is the best in the industry,” Kowach said. “We have to be open to how the model will change over the next decade.”
The bank, which has been embroiled in a number of legal controversies and scandals over the last two years, will try to determine if the independent, fee-only advisory business is “a viable business model for us,” Kowach said.
“We need to consider what [the RIA business] might look like as another platform or channel to provide services to advisors and clients,” he continued. “Everybody should be looking at it.”
Wells Fargo’s new RIAs would likely be in separate offices from the firm’s existing businesses but still use the bank’s brand, Kowach said.
Of course, getting advisors to affiliate with Wells Fargo may present its own challenges as wealth managers have more career options than ever before.
At the same time, Wells Fargo has also suffered from advisor attrition since a phony accounts scandal affected its consumer banking business. For its third quarter earnings, the bank reported a net decline of 1,012 advisors since the third quarter of 2016.
Still, Kowach may be onto something as his firm attempts to catch the wave of movement from employee to independent business models.
Over the next years the industry can expect to see a “continual migration [towards] advisor choice,” he told wealth management executives at the conference.
Indeed, in another example of a bank jumping on the RIA bandwagon, Live Oak Bank announced in September that it would be opening an independent advisory firm, Live Oak Private Wealth.
As for the future of financial advice, Kowach said it will become “the business of caring for a client’s well-being.”