Wells Tweaks Headhunter Bounties with Offers up to 12%
(Updated with additional comment from Wells spokesperson and details of Wells’ RIA referral program.)
As it continues to focus on replenishing its sales force, Wells Fargo Advisors has tweaked its already-elevated referral fees with higher bounties for its most active recruiters into its five brokerage channels.
Recruiters qualify for the new offers according to a “grid” schedule that ranges between 6% and 12% based on the volume of their new hires, according to the memo, which was confirmed by a company spokesperson.
“For 2021, we have updated the grid to include additional and broader bands that allow us to remain competitive in this space while also recognizing our strongest recruiting partners for their continued business together,” said Kim Ta, head of recruitment at Wells Fargo Advisors.
|2021 Recruiter Payment Grid
|# of Hires||Designated Firm||Non-Designated Firm|
|11 to 19||11%||9%|
|2 to 10||10%||8%|
To qualify for the 12%, recruiters must successfully introduce at least 20 new hires from “designated firms,” which include Wells’ wirehouse competitors as well as major regional firms and Edward Jones & Co., according to the memo. They will qualify for last year’s 10% payout with as few as two successful “designated” hires and can also now hit 11% after their 10th hire.
The 6% floor, which had been in earlier plans, applies to those who bring in just one candidate from a “non-designated” firm, such as a non-traditional firms or small banks, according to recruiters familiar with the new schedule.
Still, the 12% mark appears to be one of the highest in the industry and outlined Wells’ intent to rebuild its headcount, according to three recruiters, each of whom spoke on condition of anonymity because they had recruiting agreements with Wells.
“It’s a high-water mark,” said one recruiter who spoke on condition of anonymity.
Prior to the 10% adjustment in 2018, Wells had offered a 6% referral fee that rose to 8% for its most active recruiters.
The firm has been on a campaign in recent years to replenish its brokerage force which has declined to 12,908 across its private client, bank and independent contractor channels as of September 30, down by 2,718 from three years ago.
The firm has also been one of the most aggressive in offers to advisors and sweetened recruiting bonuses for brokers producing as little as $250,000 in 2019. In October, it raised its all-in deals for top-tier candidates at its private client group to 340% of annual production from 325% although it restructured the deal to base the total on hitting performance hurdles, including asset-transfer targets.
The combined effort has been successful in helping to land higher-quality candidates, and Wells’ experienced new hires have average productivity of $704,000, which is 30% greater than the production of departing brokers, the company has said.
Still, another recruiter said that the 12% figure was eye-catching and could sway headhunters to push candidates to Wells even when they were not a good fit or to focus on quantity over quality.
“It seems it’s unnecessary and a little egregious to pay almost double what other firms pay,” said the recruiter, who spoke on condition of anonymity. “It seems like they are trying to incentivize the wrong behavior.”
A Wells spokesperson said that the bonuses do not detract from its focus on hiring higher-end producers, and it will still vet any candidates according to high qualification standards.
Recruiters will determine their grid level for 2021 based on the number of new hires they introduced to Wells in 2020 and can move up the scale during the year, according to the memo.
In an example from the memo, a recruiter who brought in eight candidates last year will earn a starting fee of 10% on the first 10 hires from “designated firms” this year. Any hires above 10 will qualify for the new rate of 11% between 11 to 19 and 12% for 20 or more.
The enhanced recruiting bonuses apply to its core “branch network” of private client advisors and former bank-based brokers as well as its Financial Network, private wealth, international-focused business and its First Clearing arm, according to the memo. Introductions to its registered investment advisory custody business that launched in January 2019 are paid according to a separate structure.
Recruiters can receive a fee 6% of trailing-12 production (capped at $180,000) for RIA referrals who have at least $100 million in client assets and transfer all of their advisory assets onto Wells’ First Clearing custody platform, according to the company spokesperson.