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.