Wells to Industry: Hands Off Our Private Bankers and Neophyte Brokers
David Kowach, the president of Wells Fargo Advisors, underscored to rivals and employees this week that some bankers and “relationship advisors” who work at Wells brokerage and bank branches are not protected by the Protocol for Broker Recruiting, despite being registered brokers.
The warning, in a March 1 letter to the consulting firm that administers the pact for the brokerage industry, follows assurances from other Wells Fargo executives less than two weeks ago that the brokerage unit will not follow competitors Morgan Stanley and UBS Wealth Management out of the Protocol.
Many employees and rival firms had expected Wells to leave the pact, which allows brokers to move among Protocol firms without fear of being sued, in an attempt to staunch departures induced by fallout from the bank’s prolonged fake account scandal.
Wells’ messages to its 14,500 full-service brokers and to industry rivals are not at odds, said Shea Leordeanu, Wells Advisors’ director of communications. The bulk of registered representatives working at Wells brokerage branches remain covered by the pact, but private bankers to the wealthy and “personal bankers” selling a range of services at bank branches have never been.
“Yesterday Wells Fargo Advisors filed paperwork with the administrator at the Protocol for Broker Recruiting to clarify the ‘job families’ not included in the existing Broker Protocol Agreement,” she wrote in an e-mail on Friday. “It’s important to note that the firm did not believe these positions were ever included as part of the Protocol.”
In his letter to Protocol administrator Capital Forensics, Kowach said Wells Fargo Advisors “wishes to make plain” the positions excluded from its Protocol membership.
The list includes “any registered representative” in Wells Fargo Bank N.A.’s community banking group, its principal network of retail bank branches, he wrote. Those employees, with the titles of Licensed Personal Bankers and Premier Bankers, are distinct from the more than 3,400 Wells Advisors brokers who sit in branches and are covered by the Protocol, said Leordeanu.
Traditional private bankers, designated as wealth advisors, private bankers, regional private banking managers and regional managing directors, are also not Protocol-protected, according to Kowach’s letter, nor are “affluent relationship advisors” at bank branches.
In a sign of Wells’ strategy to more centrally control a new generation of advisers, Kowach also wrote that Financial Relationship Advisors (FRAs) at Wells Private Client Group brokerage branches who sell financial planning and other services as well as its growing group of “digital financial relationship advisors” are also excluded from the Protocol.
The excluded brokers are generally paid less than traditional brokers (most receive salaries and bonuses instead of a percentage of fees and commissions they produce).
Kowach’s letter did not specify how many employees are affected by the exclusions, and Leordeanu said she could not provide a number.
Kowach’s letter did not address why Wells felt the need to clarify the exceptions now.
“We periodically receive questions about who is covered,” Leordeanu wrote. “Similar to other brokerage firms, Wells Fargo Advisors is simply clarifying its position.”
Some outside recruiters said the bank is concerned about the continuing departures of brokers across its channels, given the migration of the scandal from branch banking to the wealth and investment management (WIM) division that was disclosed this week. The unit, which includes Wells Fargo Advisors, is under federal investigation relating to 401(k) rollovers and other activities .
Traditional banks such as J.P. Morgan & Co. that house brokers and private bankers in branches, have become more aggressive about hiring from Wells, recruiters said. A Wells insider said that some banking employees assumed they were covered by the Protocol.
J.P. Morgan employed 2,605 in-branch brokers, and will be hiring additional ones as part of a five-year plan to expand into 20 new markets, a spokeswoman said.
Citigroup also may be tapping on the doors, according to recruiters, given that it left the Protocol at the beginning of the year.
In an attempt to rally his wealth troops at Wells, WIM head Jon Weiss on Thursday sent a memo urging employees to “resist any temptation toward cynicism or negativity,” to “dig deep” and to “believe in each other and the good work we do.”
—Mason Braswell contributed to this story.