Wells Fargo Advisors has been consistently bleeding brokers following the scandal that hit the company’s retail bank last fall, but a recently-announced strategy will likely change that in the next few months, RIABiz writes.
Last year’s revelations that Wells Fargo retail branch employees opened up to two million fake deposit and credit accounts cost the firm $185 million in fines and also seemed to have tainted the Wells Fargo Advisors brand as well. The brokerage lost 429 brokers from September 20 to March 31, or about 3% of its broker force, RIABiz writes. But Wells Fargo recently unveiled a strategy to boost recruiting bonuses while many of its main rivals are doing the opposite, and that means they’re “gonna do pretty well” in attracting brokers to the firm, Bill Willis, president and CEO of the recruiting firm Willis Consulting, which recruits for Wells Fargo, tells the web publication.
Morgan Stanley, Merrill Lynch and UBS are clamping down on large signing bonuses in favor of existing brokers or luring advisors with less experience in the industry. Wells Fargo Advisors, meanwhile, said it’s willing to pay more in bonuses, RIABiz writes.
Whereas before it paid 220% of yearly revenue maximum, and only to a select few, the brokerage is now apparently willing to pay up to three times annual revenue, with half doled out upfront for brokers managing at least $2 million, a source who asked not to be named apparently told RIABiz.
And while the wirehouses were hiring 300 to 400 brokers a year when bonuses amounted to 250% to 350% of annual revenue, the cuts in bonuses mean they’ll likely only recruit half that or less going forward, Andy Tasnady, a compensation consultant who works with brokerage firms, tells the web publication. He adds that Wells Fargo isn’t likely to keep offering the deal forever and will probably reevaluate at the end of the year, according to RIABiz. In addition, Wells Fargo’s strategy may end up bringing its rivals back into the recruiting fray as well, Willis tells the web publication.
In the meantime, the bank is in hot water again — this time over mortgages, the New York Times writes. Several lawsuits now claim the bank changed mortgage terms on several bankrupt borrowers without first getting their consent, according to the paper. And while in some cases the new monthly payments were actually lower, Wells Fargo achieved that by extending the life of the loans by up to 30 years, the Times writes. In addition to failing to get the borrowers’ consent, the bank failed to get consent from the bankruptcy courts, the suits claim.
Wells Fargo denies the allegations, saying it only modifies loans after getting a sign-off from the parties involved, the Times writes.