Opened at the begging of 2019, Wells Fargo’s new RIA channel is expected to have more than 10 firms by the of the year, according to news reports. But Wells Fargo Advisors continues taking major cost-cutting measures, reportedly with new plans to reduce the number of its branch complexes by around 15%.
When Wells Fargo launched the new RIA channel early in the year, it set no hard growth targets, John Peluso, president of First Clearing, the wirehouse’s clearing unit, told FA-IQ at the time.
But four advisors have already made the move — bringing along 99% of the clients’ assets in the process — and seven more advisors are committed to join the channel by the end of the year, Peluso tells AdvisorHub.
The average RIA in the new channel manages $350 million, although that figure is influenced by David Hohimer’s $650 million under management and Perry Mattern’s $500 million, both of whom joined earlier this year, according to the industry news website.
Wells Fargo intends to start luring outside advisors to the channel next year, once it works out certain issues with its outside software providers, according to Peluso, AdvisorHub writes.
Consultants tell the website that the new channel is aimed at staunching the flow of advisors — more than 1,000 left following revelations of millions of bogus bank accounts opened at the firm — as well as to luring the competition. Peluso tells AdvisorHub that First Clearing’s rates are competitive with those of other RIA custodians.
Wells Fargo Advisors, meanwhile, is consolidating its branch complex operations, reducing the number of complexes from around 110 to 91, the website writes.
“We aim to make our business simpler, faster, and better,” John Alexander, head of Wells Fargo Advisors, wrote in a memo to advisors announcing the plans, according to AdvisorHub. “We are taking a deliberate and thoughtful approach to this work with an eye toward minimizing any impact to managers, financial advisors, clients, or the day-to-day activities of team members across our branch network.”
Wells Fargo will apparently rebrand remaining complex managers as “market leaders,” the website writes. And they’ll be tasked with managing both the private client group branch managers and the bank-based regional brokerage managers, according to AdvisorHub.
The firm also plans to offer managers at eliminated complexes the choice of managing underlying branches, returning to their own brokerage practices or leaving with severance, sources familiar with the plans tell the website. Wells Fargo expects to complete the cuts by the end of the year, AdvisorHub writes, citing the memo.
Wells Fargo Advisors has been taking various measures to overhaul its operations since Alexander took over in January.
Earlier this month, news surfaced that it was closing around half of its broker support centers that assisted brokers at bank branches and standalone private client group locations.