Wells Fargo Advisors Retains 90% of Quasi-International Brokers
Since announcing plans to close its foreign client business almost nine months ago, Wells Fargo Advisors has retained around 90% of the brokers who were forced to give up a portion of their practice, according to two internal sources.
“We’ve worked very closely with them to minimize the impact to their income as they exit those relationships,” a Wells spokeswoman said in a prepared statement. “The overwhelming majority of those advisors have chosen to remain with Wells Fargo Advisors.”
There were three categories of international brokers outlined in the January exit plan. Another group of around 200 brokers who drew more than 40% of their revenue from international customers have to exit the firm by the company’s September 30 deadline for closing the business. Around 83%, which equates to roughly 166, have left, in-line with the company’s plans, the spokeswoman said.
“Our exit from the international segment is proceeding in line with our overall expectations,” she said.
Those primarily international brokers were given incentives such as accelerated deferred compensation and forgiveness of promissory note balances, according to sources. Those who do not leave by deadline will be laid off and given bank severance packages, the company said previously.
A third, larger band of possibly several hundreds of Wells’ roughly 13,000 private client group brokers and bankers who earned less than 5% of their annual revenue last year from international customers had to offload those customers but were not granted any additional compensation. The company felt that those brokers had to give up one or two customers in most cases and would have the opportunity to rebuild their book by the deadline without disruption, the sources said.
While many brokerage firms have been putting limitations on international business for years in light of potential anti-money laundering concerns and increasing regulatory scrutiny, Wells was one of the sharpest of its wirehouse rivals in making a full break.
Competitors from rival wirehouses UBS Wealth Management USA and Morgan Stanley Wealth Management to independent broker-dealers and advisory firms swarmed Wells international brokers after the deal.
To be sure, some of the international exits among the sub-40% group may still be in the works ahead of the September 30 deadline, said Rob Mooney, chief executive of Snowden Lane Partners, a New York-based hybrid firm. Snowden, which has around 64 brokers, has hired 12 Wells international advisors to date, including some below the 40% mark, Mooney said.
“It is early,” said Mooney. “We have talked to quite a number of Wells people–many below that 40% level–and you have to wait and see how it plays out.”
Wells’ retention effort for the 200 quasi-international brokers fit with a broader focus on stabilizing headcount following steep attrition in the aftermath of its San Francisco-based parent bank’s fake account sales scandal in 2016. Those efforts also include increased recruiting deals to advisors and higher-than-standard fees to headhunters who successfully place advisors at Wells offices.