Wells Fargo Lifts Hiring Bonuses for Advisors Hitting Asset-Transfer Targets
Wells Fargo Advisors has enhanced its already elevated recruiting offer by adding asset-transfer and growth targets that can bring cash bonuses for top brokers up to 3.4 times the 12-month revenue produced at their former firms.
Two sources who have reviewed the deal said it raises the maximum ceiling on the cash deals, often in the form of nine-year forgivable loans, to 340% from 325%. It is being offered generally to million-dollar producers, though eligibility depends on years of industry experience, book quality and percentage of fee-based revenue, and other factors. (Like many competitors, Wells also will compensate recruits for deferred compensation left at their former firms, up to a maximum of 20% of their trailing 12-month production, recruiters said.)
“They already were one of the top deals on the Street,” said Diamond Consultants’ headhunter Louis Diamond, who said he has not directly viewed the revised offers. “From a pure numbers standpoint, they sound like they will be that much better.”
The catch in the new arrangement is that the upfront cash that brokers receive on Day One of their arrival has been lowered to 180% of their trailing-12-month production (T-12) from 200%. Wells is putting more emphasis on back-end performance targets, as measured by assets they attract over three years.
It will pay an additional 50% of T-12 to brokers who transfer 70% of their assets by the end of their sixth month, and another 30% at the end of each of their first, second and third years for hitting further asset-growth targets.
The performance-based change makes business sense at a time when Wells Fargo & Co.’s new management has introduced efficiency plans, including layoffs that led it to take $718 million of third-quarter restructuring charges, primarily for severance.
“It’s a structural shift,” a recruiter who works with Wells Advisors said of the back-end bonus emphasis, speaking on condition of anonymity. “They’re paying more, but it’s safe.”
The incentives, though, could raise client best-interest questions if brokers push too hard. In a regulatory filing this week, Wells Fargo reiterated its commitment to adopt the “strongest business practices and controls, maintain the highest level of integrity and have an appropriate culture in place.”
From a competitive point of view, Wells’ enhanced deal could pressure rivals such as Ameriprise Financial and Morgan Stanley that have been aggressive recruiters to stretch further, headhunters said.
Wells Fargo Advisors’ efforts to bolster its diminished ranks following the scandal has positioned it ahead of rivals on recruiting deals. It raised the top deal to 325% of T-12 in 2019, and also enticed headhunters by paying them up to 10% of a brokers’ trailing-12 month production for successful introductions, compared to industry standards of around 6%.
A Wells spokeswoman declined to comment on whether it would extend the sweetened offers to recruiters, which are set to expire at the end of the year.
“We continually assess and re-evaluate our recruiting deal in the context of the marketplace,” the spokeswoman said.
Wells Fargo had 12,908 brokers across its private client, bank and independent contractor advisory channels as of September 30, down by 2,718 from three years ago. The count was off a net 815 in the past year alone, but the bank has said that average annual production of recruits in the past year is about 30% higher than of brokers who left.
Last week, Wells Fargo Advisors recruited brokers from UBS and Merrill Lynch who each had over $2 million in annual production.
Good luck enticing the bottom of the barrel and old washed up hacks who are looking for a plan out. Weak and weaker. Go independent and stop relying on the weak banks. You’re almost as sad as Bank of America advisors…almost.
This should go over well with the loyal FA’s who have stuck with Wells – hey we’re going to cut your comp so we can bring on desperate FA’s looking for a check!
Chase FAs are pretty desperate. I’m a top producer, but I’m also greedy and I spoke with top clients. They don’t like our new leadership (neither do I) and our top economist. 500 million is ready without asking. Barry, you know me. Let’s make it happen.
This is the best part of the article, where a recruiter doesn’t want to tarnish their name by associating it with Wells Fargo. “a recruiter who works with Wells Advisors…speaking on condition of anonymity”. General rules. The firm that pays the advisor the biggest business loan on their own production has the least value outside the transaction. The house always gets that money back from you.
WARNING: do your due diligence, WFA is controlled by WFC. Point, week before last the 6 percent 401k match ($17,100) was eliminated for WFC employess, including top producting FAs making more than 250k cash comp per year. The next day the hue and cry went up the match was reinstated. WFA management wasn’t given a heads up on the change. Be wary, WFC has to cut costs and they WILL cut costs and this means comp, management and support changes at WFA. Don’t be fooled.
Our branch has lost two CAs supporting one on one to FAs, both FAs have been advised their CA position will not be filled and they will have to transfer suppport, and share support, with another CA who is already overworked. It’s not about the money when you come over to WFA, be careful and get in writing the support you need to grow your business.
I left WFA two years ago for the RIA space and haven’t regreated the move. Doing 1.7m on fee based business that transferred easily. WFAs attorney’s are afraid to cause a ruckus to stop FAs moving because of the political optics as they work with the Fed to lift their growth cap. WFA is headed to a deadend, don’t get on the train.