Veteran Broker Upset with Wells’ “Small” Accounts Policy Joins LPL

After spending most of her 38-year brokerage career with Wells Fargo and firms that it bought, Corinne Koehler says she shifted her affiliation to LPL Financial last month out of frustration with the growing costs of servicing her small accounts.

The Pueblo, Col.-based independent broker was overseeing about 300 client accounts of $120 million at Wells’ Financial Advisor Network (FiNet) for the past 12 years, and worked for 16 years previously as an employee broker at Wells-acquired Wachovia Securities, A.G. Edwards and First Union Securities.

Like many large firms, Wells Fargo Advisors has been discouraging brokers across its private client, bank branch and independent channels from servicing small accounts. It penalizes bank-based brokers with a 10% payout on accounts below $100,000 and 20% for household accounts between $100,000 and $250,000.

Wells’ 2020 compensation plan for its more than 10,000 private-client branch advisor whittles to 20% the amount of fees and commissions from clients they retain on sub-$250,000 household accounts. Wells advisors generally split such revenue 50-50 with the firm once they hit monthly revenue thresholds.

Koehler, 70, did not detail the restrictions for independent brokers, but said a new FiNet “platform fee” tis year that replaced several service fees and lower payouts on smaller accounts hurt her and her clients.

“I was really quite content at Wells Fargo until they made those major changes,” she said.

A Wells spokeswoman declined to comment on her remarks.

Wells also had planned this month to raise to $500,000 the minimum household account size clients must maintain to avoid account maintenance fees, but withdrew the plan in deference to the challenges of the coronavirus economy.

For Koehler, who shifted to LPL on May 18, the small-account penalties appear short-sighted for an industry worried about developing new generations of investors and brokers.

“I firmly believe that if we’re going to encourage people to save and invest, we can’t set such high minimums,” she said.

Neophyte investors will have all the more reason to trade at discount brokers and through algorithm-based “robo”  models, “and if they get so used to it, why would they ever need us,” she said.

Koehler, who is president of Pueblo’s Conservancy District, said her practice is highly concentrated in traditional commission-based brokerage accounts, though LPL has joined much of Wall Street in encouraging advisory accounts that generate asset-based fees regardless of transaction activity.

LPL, the largest independent broker-dealer servicing more than 19,000 brokers and advisors, is highly accommodative to Koehler’s “traditional” accounts, she said. She began searching for a new home in January, and spoke with Commonwealth Financial Network and Raymond James Financial before settling on LPL, she said.

Koehler, who began her registered rep career in 1982 with Dain Bosworth, said she has no immediate plans to retire but expects to develop a mutual client-inheritance agreement with another broker about to join LPL.

“Then we’ll take a look at finding a younger person that would want to take over both businesses at some point down the road,” she said.