There's a cure for what ails Wells Fargo Advisors
The hits seem to keep on coming for Wells Fargo.
The firm is suffering greater advisor attrition than other major brokerages, and the latest earnings report showed no signs of improvement. Wells Fargo's advisor ranks, at 14,226, were down by 173 from the previous quarter, and down 301 from the year-ago period, the bank reported in its second-quarter earnings release.
While it may seem that Wells Fargo’s reputation is damaged beyond repair, after scandals, fines and increased regulatory scrutiny, there are measures that it can take to make strides in advisor retention, image improvement, and client satisfaction.
The key is to first recognize the root of Wells Fargo's malaise. This is no longer just a top problem. The sense of disenfranchisement permeates every level of the company from mid-level and lower management, to branches, and even to support staff. To heal Wells Fargo as a whole, it's time for the company's management to take their medicine and confront the issues they face head on, all of which can start with just a few actionable steps.
Total broker head count dropped by 173 from the prior quarter, according to the wirehouse.July 13
Advisors recommended that clients sell positions in complex structured products to rack up fees, says the regulator.June 26
Step 1: Acknowledge the Problem
In business and in life, letting someone know you understand there is a problem can move metaphorical mountains.
To outside observers, Wells Fargo has turned a blind eye to what everyone else in the industry sees as a startling amount of advisor attrition. Simultaneously, the firm has not made any headway in addressing the core issues causing advisor discontent: namely a poor corporate image and its ultimate effect on advisors and their clients. It would behoove Wells Fargo's senior management to more openly admit there's an attrition issue.
Additionally, for true and lasting impact, senior management needs to move beyond the standard company letter as form of apology, and should be willing to discuss advisor attrition at every advisor event Wells Fargo leaders attend for the next year, or until they see regrettable attrition stop.
Step 2: Make Real and Lasting Change
Of course, acknowledging a problem only gets you so far.
Wells Fargo needs to actively address the advisor attrition problem with meaningful and lasting policy changes that restore advisors' faith in both the company image and the long-term prospects for organizational stability and growth. This is no easy task. But it can begin by senior management actively engaging with their advisors to work towards solutions with impact. They should personally visit advisors company-wide to solicit feedback, and not just with the biggest producers at the firm. Choosing to seek the feedback of the average company advisor, one who has withstood the ups and downs of the Wells Fargo roller coaster, would prove most beneficial in this case. These advisors can give insight into why some of their colleagues are leaving, and they'll have the practical knowledge and company loyalty required to suggest actionable measures to improve retention.
Step 3: Show Support
Change is meaningless without a support mechanism in place to make what is today's policy change tomorrow's long-term vision.
At a financial services firm, nothing speaks more to a company's commitment of support to its advisors than investing in technology. Robust technology makes advisors more efficient, better able to service their clients, and ultimately grow revenue for the client, the company, and themselves. Currently, Wells Fargo is using a platform called SmartStation that is inferior to what's available at rival firms, according to advisors with whom I have spoken. It is vital that Wells Fargo up their technology game at a moment when the industry is investing ever more dollars in new digital tools.
Step 4: K.I.S.S.
Sometimes the easiest solutions work the best.
Wells Fargo should take note of the Citi Smith Barney story.
After Citigroup took over Smith Barney, discontent began to form within the brokerage ranks. The firm came up with the “We Hear You” campaign. This was not simply a junk email address where people could send suggestions and never hear about them again. It was a working process communicated weekly to the entire field. Every week the firm would provide the number of suggestions sent in that week and YTD, the number of open items yet to be addressed, specific questions/suggestions, who made the suggestions, and what — if anything — could be done to implement them. If it was a question about a policy, the firm would send out the question, the policy as it was written, whether it was a FINRA rule or a company policy, and, if possible, what they could or could not do to alter the policy to fit the needs of the employees.
While many firms use a process like this to make employees feel good, few follow through on any of the suggestions. At Citi Smith Barney, all of the department heads were held accountable on a weekly basis to resolve or answer any questions or suggestions related to their department. The end-game was to solve problems at the firm. The bigger impact was giving employees a voice to effect change, and a better sense of belonging.
These may seem like simple measures and, in fact, on the surface they are. Yet, for Wells Fargo the simple ― and necessary ― business practices of sound corporate leadership, employee satisfaction, and commitment to the customer experience have seemingly proved elusive.
Sometimes the simplest changes are the most difficult to enact. It will be interesting to see if Wells Fargo will be able to right the ship.