Wells Fargo continues to be as committed as any firm on the street to recruiting financial advisors into its ecosystem. The numbers associated with their traditional brokerage offer makes that very clear. Crystal clear. If you are a tenured advisor and want to take down the ‘biggest deal on the street’ hit the bid at Wells Fargo.
And yet, the firm continues to sputter in the wake of the three years mature opening of fraudulent customer accounts scandal. The reality of those headlines have been a deep hole to dig out of; and the firms latest earnings announcement proves that even further. The wealth unit (and this is pre-COVID 19) saw profits drop another 20% and the total of defecting advisors now stands at 1500.
Per media reports:
“Wealth and Investment Management, the smallest of Wells’ three business sectors, earned $463 million in the quarter compared to $577 million in the year-ago quarter. The division, dominated by the bank’s Wells Fargo Advisors brokerage unit, was, uncharacteristically, the most profitable of the bank company’s three businesses. It comprised 71% of its parent company’s $653 million profit in the first quarter compared to just under 10% a year ago.”
“While the effects of the coronavirus crisis will surely dominate all earnings reports—Wells is the first bank with a major brokerage division to report—Wells Fargo Advisors made progress in stemming departures from its advisor force and in attracting newcomers. It ended the quarter with 13,450 advisors in its employee and independent brokerage channels, down a relatively modest 62 from three months earlier and off 3% from 12 months earlier.”
While the negative momentum has continued to slow, the reality is still in the numbers. And the next couple of quarters may be even worse, as the effects of the coronavirus show up on balance sheets.
Wells Fargo would be well advised to keep pushing through and recruiting their asses off. New client assets, rather than a rising stock market, is the only way through this mess.