Wells Fargo advisors get compensation relief amid coronavirus upheaval
Wells Fargo is helping advisors weather the upheaval wrought by the coronavirus by providing some relief on small account policies under its compensation plan.
It’s yet one more way that wealth management firms are readjusting procedures and strategies in light of the pandemic and accompanying market volatility.
In light of that upheaval, Wells Fargo is offering advisors relief on small household accounts — a policy that it tightened for its 2020 comp plan. For households under $250,000, the firm’s advisors are paid a flat 20% rate. Previously, it was a flat rate for households under $100,000.
Starting this month, the wirehouse will calculate small household AUM using either its current value or its value as of Dec. 31, 2019 — whichever is higher. The firm will use this formula through the end of 2020, a company spokeswoman confirms. Its compensation grid remains untouched.
“Our approach is designed to protect financial advisor compensation on smaller households. Recent market volatility may have reduced the size of those household values under $250,000, which would impact the payout level,” the spokeswoman says.
The current crisis also affected Wells Fargo’s earnings. The bank recently reported client assets for its wealth management business dropped to $1.6 trillion in the first quarter, from $1.9 trillion, a 12% decline from the year-ago period. Net income tumbled 20% year-over-year to $463 million.
Andy Tasnady, a compensation consultant, says advisors will likely welcome the comp plan relief, as many of whom are affected by the policy.
“They’re putting their finger on the clock,” Tasnady says, noting the planned relief extends through the end of the year.
Wells Fargo’s move follows Morgan Stanley, which postponed changes to its compensation plan in light of the public health crisis and market disruption. Morgan Stanley told its nearly 15,000 advisors that it would postpone to Oct. 1 planned increases in the revenue thresholds used to determine incentive compensation under its pay grid.