Wells Extends Sweetened Recruiting Offers, Headhunter Bounties
Wells Fargo Advisors has extended the outsized recruiting offers and headhunter fees it has been offering for more than a year in an effort to replenish its brokerage force, a company spokeswoman confirmed.
The wealth management arm of the scandal-plagued banking company in 2018 began offering recruiters as much as 10% of the annual production of advisors they introduced, well above the 6% norm for headhunter fees. Last January, it sweetened recruiting bonuses for advisors producing as little as $250,000 who join its private client or in-bank-brokerage ranks and also elevated offers to independent contractors affiliating with its Financial Network (FiNet) channel.
Leordeanu declined to comment on success rates or specifics of the deals, but said the extended offers for headhunters and advisors will be offered indefinitely for the time being.
Wells has lost a net 1,363 advisors across its brokerage channels since its San Francisco-based bank parent disclosed in September 2016 that employees had opened fake bank and credit card accounts for customers to meet quotas and qualify for productivity awards. The scandal, which widened to auto loans and other areas, felled two CEOS and numerous other executives and managers and created companywide reorganizations.
Though not centered in wealth management, Wells Fargo Advisors’ ranks fell to 13,723 brokers as of September 30, 2019 from 15,086 three years earlier. Recruiting successes have begun to whittle the rate of decline, but the wealth unit still lost a net 351 advisors between the third quarter of 2018 and the third quarter of 2019, according to Wells Fargo’s most recent earnings report. (The bank plans to report fourth-quarter earnings next Tuesday.) In the previous 12-month period, Wells Advisors lost a net 490 brokers.
“Their focus now seems to be blowing past a simple replacement of what they lost and growing their ranks,” said Ron Edde, a headhunter in California who recruits for Wells, and described the recruiter and broker incentives as apparently successful.
Brokers who at their previous firms generated fees and commissions from clients of at least $500,000 can receive front-end cash and deferred bonuses (if they hit transfer and production targets) as high as 325% of their trailing-12-month production, according to several recruiters who spoke on condition of anonymity. Less sought-after advisors generating $250,000 to $499,999 can still qualify for 275% of their production in forgivable loans, the sources said.
The deals are significantly higher than most rivals, and stand out when direct competitors wirehouses such as Merrill Lynch have all but withdrawn from recruiting experienced high-end advisors.
Wells Fargo Advisors also has been offering enhanced performance bonuses to branch and complex managers for hitting recruiting targets, the sources said.
In December, a five-broker Merrill team in Plano, Texas with $4.5 million of annual revenue joined the “advisor-led” channel of standalone Wells Fargo Advisors offices, following a $4- million team from Morgan Stanley that joined in Boca Raton, Florida, in September.
Wells Fargo Advisors enjoyed its best recruiting quarter since 2016 in terms of number of hires and associated production in last year’s second quarter, Leordeanu said in July. She also has characterized last year’s third quarter as “outstanding,” attributing some of the net decline in year-over-year broker count to elevated levels of retirements.
In August, Wells Fargo Advisors consolidated the number of complexes in the ‘advisor-led’ group by 15% and in May slimmed its regions to 14 from 21. In another move to assert stronger controls and lower costs it last year moved its approximately 3,000 bank branch-based brokers into the same “advisor-led” unit as its 9,500 private client advisors.