Wells Fargo Broker Count Falls Below 13,000 as Firm Lays Off ‘Salaried Advisors’
Wells Fargo Advisors’ sales force fell below 13,000 in the third quarter as it cut a “sizable group” of salaried advisors as part of a bankwide cost-cutting campaign, according to a spokeswoman.
The brokerage force has declined steadily since the bank company disclosed fake account scandals four years ago, despite Wells Fargo Advisors’ aggressive recruiting program.
“While this change represents retirements and some natural advisor attrition, it also includes the displacement of a sizable group of salary/bonus advisors as a result of the company’s work to become as efficient as we can,” Wells spokeswoman Shea Leordeanu said in an emailed statement. “Wells Fargo has been transparent that we expect to reduce the size of our workforce through a combination of attrition, the elimination of open roles, and job displacements.”
The San Francisco-based bank in August resumed cost-cuts across its divisions as part of Chief Executive Charlie Scharf’s campaign to cut $10 billion in expenses over a multi-year effort. The bank company reported third-quarter net income of $2 billion Tuesday morning, reversing a second-quarter pandemic economy loss but missing analysts’ expectations.
Leordeanu declined to comment on how many salaried advisors lost their jobs or in which part of Wells Fargo Advisors they worked. The bulk of its brokers are compensated with a grid-based percentage of revenue they produce, as is typical of brokerage firms.
Wells has about 8,400 grid-based advisors in private client offices, around 1,500 independent broker contractors in its Financial Network (FiNet) channel and some 3,300 bank branch-based advisors. Salaried advisors generally work in call centers, as Financial Relationship Advisors targeting “mass affluent” branch clients and in private banking.
“Our strategy is to focus on a highly productive team of advisors, and to manage out underperformers,” Leordeanu said in the statement. “We anticipate that the number of advisors will continue to decline as we continue this strategy over the next couple years.”
Revenue at Wells’ Wealth and Investment Management division fell 26% in the third quarter from a year earlier to $3.79 billion from $5.14 billion, affected by lower net interest income afflicting all banks due to Federal Reserve rate cuts.
Client assets in advisory accounts rose 6% to $602 billion, which the company attributed to higher market valuations. Wells did not break out new client assets brokers attracted but said outflows in its correspondent clearing business resulted in total client assets of $1.6 billion that were flat with where they were 12 months ago and at the end of this year’s second quarter.
Wells, in contrast with Merrill Lynch in its earnings report on Tuesday, did not mention new client assets brokers attracted. Wells Advisors’ “overall headcount number is not a strong predictor of revenue growth,” Leordeanu said in her statement.
Wells’ experienced new hires have an average productivity of $704,000, which is 30% greater than the production of departing brokers. “We continue the trend of hiring larger producers than those who leave,” she said.
The drop in Wealth and Investment Management division revenue also reflected a billion-dollar gain in last year’s third quarter from the sale of Wells’ institutional retirement and trust business, the company said.
Profit at the wealth division fell 64% year-over-year to $463 million as expenses rose “predominantly due to higher broker commissions and equipment expense,” the company said. Non-interested expenses of $3.2 billion were up 1%, or $31 million.