Three weeks ago we received word that Wells Fargo WMA was set to make drastic changes to its International Wealth business line. And by drastic changes, we actually mean shut it down.
And that’s exactly the action they took.
Now, it wasn’t as abrupt as other firms that have executed the move in the past several years, but advisors that manage a portion of their book outside the US were sent scrambling.
As we hear it, Wells Fargo advisors are being asked to request clients to either go elsewhere or being encouraged to take their book altogether somewhere else. The kind of abrupt and career shaking move that Wells hadn’t signaled in any way until announcing it internally a couple of weeks ago.
A few points we find interesting in regards to the new policy:
1. If an advisor or team has more than 40% of their book in international business they are being asked to leave the firm.
2. Remaining balances on previous recruiting deals are being waived to facilitate exits from Wells Fargo.
3. Wells Fargo is even allowing exiting advisors to take their deferred comp balances with them.
4. UBS and Morgan Stanley are offering deals that stretch beyond 500% of current annual production and are being aggressive in their pursuit of the right teams.
So what now? Wells Fargo teams have been doing their due diligence at UBS and Morgan Stanley – two firms where you can still meaningfully manage international accounts. Some smaller banks and boutique firms are also in the mix but don’t generally offer recruiting deals. UBS is being understandably aggressive given its global wealth management brand.
We doubt that any litigation will find its way into this move by Wells Fargo. By facilitating moves via deal forgiveness and deferred comp awards, Wells Fargo should avoid the kind of mistakes that landed Credit Suisse in hot water when they shuttered their WMA operations. As with other moves in wealth management over the past six to seven years, time will ultimately tell.
Meanwhile, in the recruiting world, it’s ‘game on’ for Wells Fargo International teams.