Wells Reorganizes Wealth Division, Melding Private Bankers into Brokerage Unit
Wells Fargo & Co. is folding its Private Wealth businesses into its Wells Fargo Advisors brokerage business next year as part of the bank company’s far-reaching efforts to cut costs and conserve capital.
Some of the shifts have begun, but most of the transition of the private bank teams will occur in 2021, said Wells spokeswoman Shea Leordeanu.
She declined to confirm the number of employees in the private banking division, but one private bank advisor estimated there are about 400 advisors.
“We are bringing our brokerage and wealth businesses together into one client-facing structure,” Leordeanu wrote in an email. “By creating one overarching management structure, we will simplify processes, improve how we operate, and deliver even better and faster service for our clients.”
The shifts will reduce overhead costs by eliminating redundant management roles, part of the company’s ambition to cut $10 billion of expenses annually, insiders said. The ultimate goal is a single layer of regional and market managers, said a Wells Advisors branch manager.
Julia Wellborn, who headed the Private Wealth division since July 2019, has handed the reins to Jim Hays, who was elevated to president of Wells Fargo Advisors at around the same time. Wellborn is assuming a new position as head of client experience for the wealth businesses, and will retain some bank regulatory responsibilities for wealth activities, Leordeanu said.
Wellborn and Hays will continue to report to Sommers.
Details of the integration, including management lines and revised asset thresholds for clients to qualify for private wealth services are still being determined, according to a person familiar with the company’s strategy. One private banker said Wells expects to more than double account minimums to $5 million next year, but Leordeanu said no final decisions have been made.
In an earlier attempt to simplify management structures, Wells two years ago folded its Wealth Brokerage Services unit of brokers in bank branches into the larger private client group unit of Wells Fargo Advisors brokerage offices. It also reduced its geographic regions to 12 from 21.
The organizational shift of private bankers will not change compensation structures, said an insider familiar with the plans. Private bankers will continue to be paid primarily through bonus-supplemented salaries while brokers will receive a percentage of the fees and commissions they generate.
The restructuring of the wealth and investment management sector is part of a far-reaching drive by Wells Fargo Chief Executive Charlie Scharf to rebuild profit and capital in the wake of fake-account bank scandals that have shadowed the company for four years
Scharf is considering selling the company’s asset management business, Reuters reported this week. Wells earlier this week said it would end 401(k) matching benefits for employees making over $250,000 but rescinded the decision on Friday after internal backlash.
The plan to merge the private wealth and brokerage businesses was earlier reported by “FA-IQ.”