Wells Ups Bounty for Headhunters in Short-Term Recruiting Push
(Updated with comment from Wells Fargo in 10th paragraph.)
In a promotion that appears aimed at replenishing its scandal-depleted salesforce, Wells Fargo & Co. on Thursday unrolled a super-charged “referral” fee for headhunters who bring eligible recruits to any of the bank’s five wealth management channels.
Its Wells Fargo Advisors unit will pay 10% of a candidate broker’s trailing 12-month revenue if he or she is hired between now and September 30 of this year, according to a letter agreement reviewed by AdvisorHub that was sent by Sarah K Warren, the St. Louis-based broker-dealer’s manager of “Lead Generation.”
Most brokerage firms pay recruiters 6% of an experienced broker’s trailing-12 fees and commissions, and Wells typically pays its top 10 most active recruiters 8%. Although Wells pays the 6-8% fee on the first $750,000 of a broker’s production, the fee drops on the production balance above that.
There is no cap on the new 10% referral offer, meaning a firm recruiting a $1-million producer can pocket $100,000. And the fee will be paid on hires from both “designated” and “non-designated firms,” the letter said, in an appeal to recruiters that may not have contacts at larger and/or high-reputation firms.
The fattened referral fee is likely to concentrate headhunters’ efforts on Wells for a few months but has a downside, said three recruiters. It signals a level of despair following the loss of more than 350 brokers after the account-opening scandal at Wells Advisors’ sister bank.
“They’re desperate to get people,” said Michael King, a headhunter in New York, noting new articles about potential problems and investigations within Wells’ wealth management business. “The fact that the brokerage firm is now involved is a little troublesome.”
Another recruiter who spoke on condition of anonymity also cited practical considerations, considering the limited shelf life of the “temporary referral” bounty.
“It’s asking a lot to identify a candidate, urge them to take meetings, do the meetings with them and be onboard within six months,” said the headhunter, a former wirehouse manager who spoke on condition of anonymity. “For the next sixty to 90 days recruiting firms will focus their attention on Wells but after that it’s diminishing returns since it will be hard to qualify them by the end of September.”
He said that while he believes Wells will emerge from the scandals’ shadow, it remains difficult to convince top brokers currently to chance losing their clients by moving. “The large universe of advisors will be happy to consider it in two years, but no one wants to have to explain now when there are headlines about congressional scrutiny, SEC scrutiny and substantial fines,” he said.
A spokeswoman for Wells Fargo, Helen K. Bow, said in a statement that the new policy was part of, “[a]n effort to continue to be a leader in attracting high quality financial advisors, during a period of low FA movement across the industry.”
The 10% fee will be paid for recruits to all parts of Wells’ brokerage business—its core Private Client Group of standalone Wells Advisors offices, its Wealth Brokerage Services units operating from Wells bank branches and its international private client services unit. It also applies to advisors hired at smaller broker-dealers that use Wells’ First Clearing channel for back-office and financing services, according to the letter.
“They want to attract attention,” said Ron Edde, a recruiter in San Diego.
-Mason Braswell contributed to this story.
Nobody wants to bring their book there. Wells is in trouble, clients just won’t follow and who wants to risk losing a client to change BDs?
It takes 4 months for a broker to move on average- so you need to submit the candidates in the next 30 days in order to get the new % — the time frame shows how ridiculously out of touch WF is.
Phil makes a good point that I hadn’t thought about
I placed an FA with FiNet (Wells Fargo’s independent channel) recently, and so far over 80% of the advisor’s clients have moved their accounts over. According to the advisor, only one client balked at moving due to concerns over the negative press, and it wasn’t one of the UHNW ones. My experience is that 80-95% of clients typically follow an advisor who goes independent, so the concerns being expressed (understandably) do not seem to be borne out in actual experience. Moreover, I’ve spoken with multiple advisors who have moved to various channels at Wells since this situation came to light, and only one expressed that he had experienced significant resistance from some of his clients after the move. Time to stop typing and start calling.
Ron- i agree with you. In the long run WF will survive and things will go back to normal. But i do have a point to make— As you stated- “since the situation came to light” Lets be honest, if it was one situation it would be cool, but there are multiple situations, and they seems to never end. it doesn’t help that Elizabeth Warren has her re-election pending on Wells Fargo’s failure. What i find crazy is the time limit on this new % given to recruiters. Anything that is sent in later then June 1st will most probably not place by the deadline. I find it ridiculous that WF thinks that recruiting firms can be so naive. You want people to recruit for you because you are in desperate need to hire people because you screwed things up, then make the deal that anyone PRESENTED by September 30- NOT HIRED. the language is conniving– i guess WF has learned nothing from its mistakes.
Looks like a desperate arms race to me. Advisors are smarter thank banks think they are…..
Wells Fargo advisors are clowns. Couldn’t even tell me what money funds could be traded through them.