Wells Fargo Tallies 10% Drop in Advisor Headcount Over Last Year
A long-running downward trend in Wells Fargo’s advisor headcount has accelerated, the company’s second quarter financial results revealed.
The declines reflected, as Wells had anticipated, an increase in departures by international-focused advisors in the wake of the bank’s announcement in January that it would close its foreign wealth business, said Shea Leordeanu, a company spokeswoman.
She also underscored, however, that Wells’s plan to continue recruiting aggressively. “Our hiring pipeline is stronger for the second half of the year,” she said.
The most recent departures follow a years-long trend, triggered by the bank’s fake accounts scandal that blew up in the fall of 2016. At the time, the bank reported having 15,086 advisors in its retail brokerage unit, Wells Fargo Advisors.
While the latest count of 12,819 advisors would represent a roughly 15% drop from that 2016 number, Wells at the end of last year changed the way it tallies advisor headcount, which now also includes Wells Fargo Advisors and “financial and wealth advisors” who had been overseen by the consumer bank but were merged into the core private client group.
Meanwhile, annualized revenue per advisor increased 2.4% sequentially–and more than 20% year over year–to a record $1.08 million, according to the firm’s financial results.
The bank’s Wealth and Investment Management unit, which includes Wells Fargo Advisors, saw its quarterly revenue increase 10% year-over-year to more than $3.5 billion, primarily due to higher asset-based fees on higher market valuations, the company said. The unit’s total client assets climbed to a record $2.14 trillion as of the end of the second quarter, up 4% from the end of the prior quarter and up 20% from the year-ago quarter.
While the Wells spokeswoman set expectations that FA ranks will grow in the back half of 2021, Charlie Scharf, the parent bank’s chief executive, told stock analysts during a conference call Wednesday that the overall bank employee roster will likely shrink. The bank has more than 230,000, the largest number in the U.S. banking sector, but has reduced its employee headcount 6% year over year.
“[W]e still continue to believe that there are significant efficiencies on a gross basis that we’ll be able to continue to drive out the company,” Scharf said, noting that he would “love to do as much of it through natural attrition as possible.”
Since 2020, Wells has restructured and reduced the number of managers in its wealth management divisions. In October 2020, Wells announced plans to fold its Private Wealth businesses into its Wells Fargo Advisors brokerage business as part of the bank’s far-reaching efforts to cut costs and conserve capital. In March, it unveiled a plan to consolidate the 12 regions of its private client group into eight and give broader management sway to fewer executives, as well as shutter its Minneapolis-based Abbot Downing as a separate brand that services ultra-high-net-worth families, foundations and endowments.
Scharf also told analysts on the call that the bank has “completely underutilized” both its online capabilities with its self-directed platform Wells Trade and Wells Fargo Advisors’ independent Financial Network channel.
“And so that work is going on in the background,” Scharf said of plans to jumpstart wealth management and other business lines. “And hopefully…you’ll start to see things come to market.” Internal and external bank sources previously told AdvisorHub that Wells had begun mulling a bigger push into the self-directed channel.