Even when they are trying their best, it seems the Wells Fargo leadership team can't help but miss the mark.
This isn't for a lack of taking on new projects. Wells Fargo has launched a new advertising campaign to refurbish the company's public image, is considering a major restructuring of its wealth management division and recently unveiled plans to offer clients a way to opt-out for the Broker Protocol.
No, it's actually these initiatives that create new pain points for advisors.
The fact remains ― and it is a hard pill for Wells to swallow ― that the campaign to refurbish the firm's image is a case of too little too late. More importantly, our firm has learned the efforts of reimaging are not supported by Wells Fargo's own advisors. They would rather these efforts cease as it is having the reverse of the intended effect by reminding clients of how bad things have really gotten at the firm.
Meanwhile, the company is considering merging roughly 14,400 advisors onto one platform and eliminating over 1,000 jobs in a bid to cut costs, according to a recent Wall Street Journal report. Based on my 25 years of experience in financial services, this inevitably will lead to a deterioration of the relationship between advisor and customer. A key driver for advisors delivering a high service model to their clients is the support they get from their home office. Hold times, lack of answers to client questions, or simply having someone on the other end of the line that doesn’t have the time to work through an advisor/client problem leads to poor service and worse results. With this potential consolidation, Wells is expecting fewer support people to handle questions from advisors operating under two different types of services models: PCG and bank channel advisors.
And if these two types of advisors end up on the same platform, they should expect a "leveling out" of compensation programs. Merging platforms is what financial services firms do when they are trying to cut costs and find ways to streamline systems and fees. It’s standard practice when merging large groups of advisors and clients to look at areas like client account fees, transactions charges, ticket charges, technology fees, and advisor compensation to try and match these areas up. Firms will always look at ways to save more on expenses, and ways to make money off fees when they go through a process like this. It's business 101.
Finally, there's the new initiative by Wells Fargo to notify clients on how they can opt-out of the Broker Protocol by deciding whether advisors may take their contact information with them when switching employers. Unfortunately many clients don’t actually read these documents completely and therefore will not understand what they are opting out of.
This is effectively a way for the firm to circumvent the protocol without actually getting out of it.
These types of consolidation decisions, reductions in support staff, and potentially other cost cutting initiatives are just further proof of the continued blind-eye Wells Fargo seems determined to turn on truly addressing its most serious issues. It is indicative of the many reasons why we see large advisory teams leave Wells Fargo for smaller firms like Raymond James, Kestra, Triad, Cambridge, and others. These advisors are not choosing to leave Wells for some monster transition check; they are leaving due to poor service levels, a near unrecoverable market image, and a lack of support by a management team that continues to take a finger in the hole of a dam approach to leadership.
More than 80 brokers managing over $12 billion in assets have left the wirehouse since January 1, according to reporting by On Wall Street.
In my opinion, if Wells Fargo is determined to merge business units, the next logical step would be to merge the independent FiNet advisor channel underneath the PCG/WBA markets and structure it so it is run by a single management team. Currently, Wells Fargo already has very similar policies and procedures that straddle all of their business units, so why not make it official and combine the units under one management group? Alternately, if the firm is looking to streamline management ― a nice way of saying eliminate overhead ― then why not have all units under one management structure with the same processes, procedures, and pricing while retaining some flexibility for the independent FINET channel advisors?
I'm not suggesting that this is what Wells Fargo is actually going to do, though an iteration of something like this already exists at Raymond James and, when done right, is resonating with advisors across the industry.
Sadly, for now it seems that Wells is determined to see their reflection in the mirror as what it was before and not what it currently is now. Until they do choose to take hard look and face their new reality, it can be expected we will see more of the same.