Depleted advisor ranks signal Wells Fargo’s attrition isn’t over
Wells Fargo still hasn’t turned the corner on advisor attrition.
Headcount dropped 4.1% to 13,828 advisors for the first quarter, from 14,399 for the year-ago period. The company had 13,968 advisors in the prior quarter, according to the bank’s earnings report.
Wells Fargo’s depleted headcount took a toll on the performance of its wealth management business. Net income fell 19% year-over-year to $577 million. Client assets for the bank’s Wealth and Investment Management unit fell 2% to approximately $1.8 trillion.
The unit’s attrition prompted an analyst to ask Wells Fargo’s senior leadership during an earnings call if they would consider “a strategic sale if it offered a path to creating greater shareholder value, or said differently, if somebody else can maybe better monetize the asset?”
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CFO John Shrewsberry replied he doubted the bank would consider a sale in “relatively near term.”
“It's not on the short list of things that we're talking about as we've been doing the noncore trimming here and there like retirement, for example, most recently,” Shrewsberry said, referring to the recent sale of a retirement plan services unit to Principal Financial Group.
Wells Fargo has suffered attrition since a fake accounts scandal came to light in 2016. Since then, more scandals have rocked the company’s consumer bank, costing more than a $1 billion in regulatory penalties. Two CEOs have stepped down in the past three years, and the bank is currently searching for a new chief executive. And the Federal Reserve took the unprecedented step of capping Wells Fargo’s asset growth.
Advisors leaving Wells Fargo have cited the barrage of negative headlines as well as what they see a burdensome bureaucracy. Many of those brokers have joined regional BDs while others have gone independent. Headcount at Wells Fargo is down a net 1,258 advisors since the third quarter of 2016.
The industry has struggled to attract young talent to replace retiring baby boomers. However, headcount at rival wirehouses has not fallen nearly as fast as at Wells Fargo. In fact, Merrill Lynch has slightly expanded its advisor ranks and has plans to increase it still more by about 1% per year.
Wells Fargo, meanwhile, has continued to try to lure away talent from rival firms. The other three wirehouses have cut back on hiring from competitors. Plus, the bank launched an RIA channel in January to attract assets from the independent space and retain those of its own advisors considering a move to independence.