Wells Fargo Advisors Headcount Slips With International Exits, Retirements
Wells Fargo Advisors’ broker headcount extended its long-running decline in the first three months of the year, although the company said its effort to hire more productive advisors is paying off.
Wells Fargo spokeswoman Shea Leordeanu said in a prepared statement that the declines were “anticipated” and included early departures of international-focused advisors in the private client group who have joined other firms since Wells announced in January it is closing its foreign wealth business over the next nine months as well as planned retirements through its sunsetting program.
“This quarter we saw some anticipated changes that impacted headcount, including early departures of international focused advisors, other departures from the industry, and continued retirements due to the highly successful Summit succession program,” Leordeanu said. “[O]ur strategy is to focus on highly productive advisors across all channels, rather than on overall headcount.”
The advisors who have joined in the first quarter are 35% more productive than those who have left, she said.
Despite the declining headcount, the Wealth division, which includes the core private client group, independent Financial Network brokerage and The Private Bank, boosted revenue by 8% to $3.54 billion from $3.27 billion in the prior year. That revenue growth was based on higher asset-based fees due to rising client balances and increased commissions from higher customer transactional activity. The wealth unit comprised just under 20% of the bank’s total revenue of $18.06 billion in the quarter.
The revenue rise was not enough to outpace increasing expenses, however, as net Wealth income fell 8% to $419 million due to higher revenue-related compensation, according to the report. Expenses at WIM were up 14% to $3.028 billion in the first quarter.
Wells Fargo under Chief Executive Charlie Scharf has been on a mission to cut costs across the bank, including streamlining Wells’ various wealth businesses and its field leadership structure and selling its asset management business.
“We are also moving forward with our commitment to simplify the company and focus our resources on our core customers. We announced sales of our Asset Management and Corporate Trust businesses in the quarter and we are increasing resources dedicated to initiatives to help drive growth in our core franchises,” Scharf said in prepared remarks.
On an individual level, average annualized revenue per advisor, which is calculated as annualized average total revenue divided by the average of the last two quarters’ headcount, rose 5% year-over-year–to $1.058 million.
Wells also benefited from rising markets that have soared since the pandemic-battered quarter one year ago. Client assets were up 28% to a record $2.062 trillion from $1.611 trillion at the end of last year’s first quarter. Around $885 billion of those assets were in fee-based accounts.
The boost from rising markets lifted results at wealth businesses at other large banks reporting on Wednesday. Goldman Sachs’ wealth management revenues jumped 13% to $1.37 billion from the same time period in 2020. The increase was due to “higher management and other fees, reflecting the impact of higher average assets under supervision,” the bank reported.
Wells’ wirehouse competitors Morgan Stanley Wealth Management and Merrill Lynch will report results Thursday and Friday.
Overall, Wells Fargo & Co. beat expectations for first-quarter earnings of $17.5 billion in revenue. Its stock was up 4.13% as of 10:54 in morning trading.