Wells Fargo & Co. continues to see a significant decline in its overall headcount of financial advisers as it reshuffles its Wells Fargo Advisors business unit and shuts down its international wealth management business.
The bank reported on Wednesday morning declines of 236 advisers quarter-over-quarter, or 2% of its total, and 1,087, or 8%, year-over-year, at the end of March.
In its first quarter earnings report, Wells Fargo Advisors had 13,277 financial and wealth advisors at the end of the first quarter. That’s compared to 13,513 at the end of December and 14,364 at the end of March 2020.
Wells Fargo recently revised how it tallies its adviser headcount total and this year began including about 800 to 900 private bankers and portfolio managers that worked at its “private wealth” unit, which includes its private bank and Abbot Downing, which are being merged into Wells Fargo Advisors.
Wells Fargo has been hemorrhaging financial advisers for years, with the exodus in part sparked by the fallout from the bank’s 2016 scandals. The bank has also seen advisers retire and sign up for a new succession plan called Summit that ties them more closely to the firm.
But adviser departures will only continue to erode the firm’s adviser headcount over the next six months as Wells Fargo Advisors shuts down its international wealth management operations, which includes halting advisers from managing money for overseas clients. Wells Fargo has not released a specific number of international advisers who will leave the firm.
But overseas clients are often wealthy and therefore can be lucrative and can contribute thousands of dollars of annual revenue for financial advisers at wirehouses, who earn roughly 40 cents per each dollar of revenue they generate for the firm.
The firm has said it would offer retention — meaning some form of payment — to advisers who lose international clients to offset the lost revenue. But one Wells Fargo adviser said any reimbursement to advisers who lose clients will be partial, temporary and limited.
“It only takes a couple of $10,000 to $20,000 per year revenue clients to lose to put a dent in one’s practice,” said the adviser, who asked not to be identified.
As it simplifies its business lines, Wells Fargo Advisors is trying to focus on its strategy of advisers who produce more annual revenue rather than its headcounts, said Shea Leordeanu, a company spokesperson.
“This quarter, advisers joining us are more than 35% more productive than those departing,” she said. “This quarter we saw $1,058,000 productivity per advisor, which is nearly 5% higher than last quarter and 16% higher than last year.”
Citing company policy, Leordeanu declined to give specific number about the number of advisers who had joined or left Wells Fargo Advisors recently.
In the first quarter, Wells Fargo also announced the sale of its asset management business, which had been anticipated.
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