Wells Fargo Commits to Staying in Broker Protocol
Wells Fargo Advisors will remain in the Protocol for Broker Recruiting despite exits by two of its major competitors, two senior executives told top brokers and managers at a meeting at the broker-dealer’s St. Louis headquarters this week.
The message was conveyed by Richard Getzoff and John Alexander, the division heads of the 11,000-broker private client group, according to a manager at the meeting.
Wells Fargo Advisors spokeswoman Emily Acquisto declined to discuss what was said at the meeting but confirmed that the firm “remains committed to staying in the Protocol,” she wrote in an e-mail.
In November, Getzoff told AdvisorHub that the brokerage firm was “monitoring” how to respond to Morgan Stanley and UBS Wealth Management’s decisions to exit the pact, which allows brokers to move among signatory firms without fear of being sued if they try to contact former clients to jump-start their practices at new firms.
Morgan Stanley has been seeking restraining orders against former brokers since its exit and UBS has been tightening agreements to keep its brokers in the fold. By remaining in the pact, Wells Fargo and Merrill Lynch remain vulnerable to recruiting efforts by smaller Protocol firms.
Despite noting their commitment to the pact, Getzoff and Alexander said Wells Fargo could reevaluate its decision if other large firms still in the Protocol decide to leave, according to the source. The major takeaway for managers, however, is that they should operate on the principle that recruiting remains a big part of their jobs.
“We are staying in Protocol—we don’t want our advisors to feel they are being held hostage,” the manager wrote in an email. “Wells Fargo has never been as committed to recruiting as they are now.”
Getzoff and Alexander also emphasized that Wells has become more flexible about allowing existing brokers and prospects to move among its affiliation channels—the private client group branches staffed by employees, its independent contractor Financial Network platform and its Wells Fargo Bank-based brokers. In a nod to that flexibility, Wells is eliminating a levy it has been collecting from brokers who leave the private client group for FiNet, which is less lucrative for Wells than the others but which has been attracting brokers eager for more autonomy and higher payouts.
Wells executives furthered their flexible stance by telling managers they will be compensated if they refer broker candidates they interview to the independent channel, sources said.
Wells Fargo Advisors’ commitment to recruiting contrasts with pullbacks by Morgan Stanley, Merrill Lynch and UBS Wealth Management, which have trimmed their budgets. Recruiting experienced brokers is expensive, but Wells likely feels pressured to remain in the hiring game to offset attrition it was experiencing as a result of the widely publicized fake-account scandal at its sister bank.
Wells Advisors reported a net loss of 350 brokers in the first half of 2017, but grew slightly in the second half to end the year with 14,564 advisors across its brokerage channels.