Wells Fargo Has Lost More Than 70 Teams Since the Scandal
Wells Fargo Advisors has been losing reps since last year’s revelations that employees in the company’s banking business opened as many as two million bogus accounts, InvestmentNews writes.
From October to the end of June, 70 advisor teams collectively overseeing $19.2 billion left Wells Fargo Advisors, according to the publication’s analysis. The brokerage added only 13 teams, collectively managing $1.7 billion, during the same period 12 months before, InvestmentNews found.
The publication used public announcements and news reports about advisor moves to compile the data, which it says doesn’t include all advisor moves. Since Sept. 30, 559 Wells Fargo financial advisors left the brokerage, slashing its advisor headcount by 3.7%, according to InvestmentNews.
Since September, when Wells Fargo paid a $185 million fine over the fake account openings, the firm has faced numerous other complaints. Among lawsuits filed just since the beginning of July, one alleges that the bank forced nearly 250,000 clients into delinquency by pushing them into unnecessary car insurance. Another accuses the bank of overcharging clients of its merchant credit-card processing business.
Wells Fargo Advisors, meanwhile, agreed to settle a $3.5 million class-action suit last month over forcing advisor trainees to reimburse the cost of their training when they left the firm or were fired. Wells Fargo’s brokerage also took a hit to its reputation when a lawyer for the firm accidentally sent out private data on thousands of its private clients.
However, Wells Fargo Advisors is trying to lure brokers back by increasing the bonuses to experienced reps, bucking the trend set by rivals Morgan Stanley, Merrill Lynch and UBS, which have decided to step away from large signing bonuses, InvestmentNews writes. It’s unclear, however, whether the firm will be able to overcome the reputational damage, according to the publication.
One recruiter tells InvestmentNews that Wells Fargo Advisors has a lot of drawbacks, but, because it’s still offering big bonuses, its “brokerage arm is still a viable player.”
Meanwhile Wells Fargo says most of its FA departures are due to “demographic and regulatory shifts” that have caused advisors across the industry to retire.
Further, the firm is seeing its existing clients investing more assets with Wells Fargo Advisors, the firm tells InvestmentNews.
The brokerage had $1.6 trillion in assets as of the end of June, a 6.7% increase over the year prior, according to the company’s second-quarter earnings data cited by the publication.