Wells Fargo sees more adviser retirements after an 'enthusiastic' response to its next-gen handover payouts (WFC)

A Wells Fargo stagecoach is seen at the SIBOS banking and financial conference in Toronto, Ontario, Canada October 19, 2017.

  • Wells Fargo said retirements drove adviser headcount lower in
    its wealth management arm the third quarter.
  • San Francisco-based Wells expects retirements to continue as it
    uses incentives to encourage its own advisers to take over client
    books when people retire. 
  • Like the broader wealth industry, the firm is facing a
    retirement cliff that some fear could leave firms without enough
    young talent to hold onto existing client assets.
  • Wells has lost some 1,400 advisers since a sales practices
    scandal first came to light in its retail arm in 2016. But this
    quarter, it said that it hired more people in than the number of
    people that left for competitors. 
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said retirements drove its financial adviser headcount
lower in the third quarter, and it expects to see more retirements
as it uses incentives to encourage younger advisers to take over

Like the broader wealth industry, Wells Fargo is staring down a
retirement cliff that some fear could leave firms without enough
young talent to hold onto existing client assets. Enhanced young
adviser training and succession programs are examples of firms
looking to help bridge that gap. 

The number of advisers in Wells’ wealth management arm fell to
13,723, the bank said on Tuesday, down 76 people from the second
quarter and 351 below the year-ago period. Adviser headcount is now
some 1,400 below where it was before the bank’s wide-ranging retail
sales practices scandal first came to light in its retail arm in

But Wells Fargo, one of the biggest US wealth managers, said
that the most recent quarterly decline reflected adviser
retirements, and that it had meanwhile hired more advisers in than
had left for competitors. 

Read more:
Merrill Lynch hiked starting salaries for trainee advisers by
$10,000 and has taken on 1,700 newbies so far this year. We have
the details.

Wells rivals like Bank of America Merrill Lynch are keenly aware
of the demographic challenge. Merrill president Andy Sieg
told us earlier this month
that the firm had bumped up the
starting salaries for trainee advisers — and has deployed
performance managers around the country to coach them as it’s
dialed back on more experienced hires. He also said that a
team-based approach is key to setting up next-gen advisers for

Wells for its part leaned into accelerating handovers when it
introduced its Summit program during the second quarter, which is
aimed at encourage retiring financial advisers to sell their books
within the firm. It bills the program as a means to transition
clients from a retiring adviser to a successor.

“We anticipate continued retirements, as we’ve seen enthusiastic
response to Summit, our enhanced succession program,” Wells Fargo
Advisors communications manager Kim Yurkovich told Business Insider
in an email.

Here’s how the program works: the firm offers a bonus
arrangement and optional loan feature to remaining advisers who are
taking on books of business from retiring advisers. To sweeten that
deal, advisers exiting the firm can also receive a deferred payout
of 25% of the revenue they generated over the last year. Then, the
adviser taking on those clients gets his or her own award from the
firm of up to 100% of that book’s revenue over the last year. 

Read more:
Wells Fargo has seen 1,000 financial advisers depart since its
sales scandal broke in 2016. Here’s how it’s fighting back to
retain talent and attract young hires.

Wells Fargo Advisors had also introduced a tool designed to
build teams and help out with succession planning. It can help new
FAs find a team or find someone that is interested in handing over
their books. 

Yurkovich declined to provide precise metrics for advisers
opting into the Summit program; John Alexander, head of integrated
brokerage for Wells Fargo Advisors,
told us last month
that “interest in the program has been very

Yurkovich, the company spokesperson, said on Tuesday that the
average productivity for Wells’ experienced new hires’ is 33%
higher year-to-date than it was last year.

“Further, these new hires do about 58% more production than the
average advisor leaving for competitors — evidence that we are
recruiting larger producers than those leaving,” she said.

Read more:
Wells Fargo posts earnings miss driven by $1.6 billion expense
linked to scandals

Recruitment pipelines “remain strong,” Yurkovich said, adding
Wells hired more advisers than left to competitors.

Beyond Wells’ wealth management arm, the San Francisco bank is
in a moment of transition. It’s trying to move forward while
operating under a punitive growth cap imposed by the Federal
Reserve, and deal with various sales practices scandals that
started coming to light three years ago.

Wells has recently reshuffled leadership inside and out of
wealth management. The firm in late September named Charlie Scharf,
the former chief executive of BNY Mellon, as its new CEO effective
October 21. He will replace Allen Parker, who had served as interim
CEO since March.

In July, the firm named
Jim Hays, previously head of the Private Wealth Financial Advisors
group, which caters to high-net-worth clients, as Wells Fargo
Advisors’ president and head. 

Hays took over for David Kowach, who went to head community
banking. Hays reports to Jonathan Weiss, head of wealth and
investment management.

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Wells Fargo sees more adviser retirements after an 'enthusiastic' response to its next-gen handover payouts (WFC)