Wells Fargo Advisors to Cut Branch Complexes
Wells Fargo Advisors is trimming more costs from its branch-management structure, cutting the number of complexes in its retail brokerage network by around 15% to 91 from almost 110.Former complex managers will be offered roles managing underlying branches, return to building their own brokerage practices or leave with severance, according to sources familiar with the changes. Managers were briefed on the changes on Thursday, and plans were announced to Wells advisors on Friday afternoon in a memo from John Alexander, head of Wells’ “integrated brokerage.”
“We aim to make our business simpler, faster, and better,” wrote Alexander, who became head of the business in January. “We are taking a deliberate and thoughtful approach to this work with an eye toward minimizing any impact to managers, financial advisors, clients, or the day-to-day activities of team members across our branch network.”
The St. Louis-based brokerage unit of Wells Fargo & Co. expects to complete the restructuring by the end of the year, according to the memo. Remaining complex managers will be reclassified as “market” leaders, a rubric used by rival Merrill Lynch, and will oversee both “private client group” branch managers and Wells Fargo Bank-based “regional brokerage managers.”
The reduction will occur in stages that parallel the previously announced closing of compliance and support staff offices servicing some 12,000 brokers.
Wells Fargo Corp.’s Wealth and Investment Management division plans to eliminate $600 million of annual expenses as part of the broader cost-cutting measures. The division, Wells’ smallest as measured by revenue, reported $602 million of net income in the second quarter, up 4% from the first quarter on lower costs.
Wells Fargo in May reduced the structure overlaying the complexes to 14 regions from 21. It folded its Wealth Brokerage Services unit of approximately 3,000 bank branch-based brokers into the core Private Client Group of 9,500 brokers one year ago to create the “integrated brokerage.”
Alexander’s memo said the next expense focus will involve bank-based regional brokerage managers.
“We continue to work on the next steps for aligning the RBMs for both the Private Wealth Financial Advisors group and the branch network,” Alexander wrote. “We will continue to keep you posted as we move forward.”
The initiatives come as Wells Fargo & Co. is reorganizing company-wide in an effort to lower costs, increase management accountability and modify its hyper-competitive sales structure in the wake of fake retail bank account and insurance sales scandals disclosed almost three years ago. The San Francisco-based bank company continues to operate under asset constraints from the Federal Reserve Board, has fired two chief executives and is searching for a permanent CEO.
As part of the ongoing shifts, Wells Fargo Advisors is getting new leadership. Jim Hays, who joined Wells 14 years ago after 18 years with Merrill Lynch, will replace David Kowach as president of the retail brokerage business at the end of August. Kowach has been promoted to run Wells Fargo’s 68,000-person community banking unit, which includes 5,400 retail bank branches.
Wells Fargo Advisors as of the end of the second quarter had 13,800 brokers, including independent contractors in its Financial Network (FiNet) channel. But the business has lost more than 1,300 brokers net since the fake accounts were disclosed in September 2016.
The St. Louis-based brokerage unit has been offering signing bonuses and premium headhunter fees to replenish its sales force.The St. Louis-based brokerage unit has been offering signing bonuses and premium headhunter fees to replenish its sales force.