Wells Fargo Lards Recruiting Deals as Rivals Turn Spartan
Stepping into a breach created by rival broker-dealers’ retrenchment from costly recruiting wars, Wells Fargo Advisors has told its managers it will significantly raise signing bonuses they can offer brokers with substantial books of business.
Well-placed sources at the private-client retail brokerage group of Wells Fargo Corp. said the firm will formalize the offering in coming days, but has told managers to begin talking up the deals.
Brokers producing about $2.5 million or more of revenue annually will be offered as much as 150% of that amount as a forgivable upfront cash loan and another 130-140% on the “back-end” if they hit asset-gathering targets in five and ten years, according to sources and outside recruiters.
The deal, which will be scaled down at lower levels, fattens the upfront 125-175% range Wells currently offers and together with the deferred money approaches the 300% deals that Morgan Stanley, Merrill Lynch and UBS AG’s U.S. broker-dealer had been offering to each other’s top-tier brokers. Those firms were recently instructed by their bank parents to curtail expensive recruiting packages that provided few net customer-asset benefits as they raided each other for brokers’ books of business.
“It looks like a real opportunity to make hay while the sun shines,” said a long-time Wells Advisors private client group branch manager, who spoke on condition of anonymity. “The initial blush is that for some reason—probably desperation—our guys have said we’re going to go full steam ahead.”
Wells’ new offer aims to replenish a brokerage force that has been depleted by its parent company’s disclosure last September of fake-account opening scandals in its consumer bank. Wells Fargo Advisors has registered a 3% drop in its brokerage force of 14,657 since the scandal was disclosed and recruiters said it has been hard to attract new advisers to the core private client brokerage group where the new deal will be offered. (Wells offers brokerage services through about 11,000 standalone branch brokers as well as through in-bank brokers, private bankers and independent contractors in its Financial Network channel.)
While Morgan Stanley and Merrill Lynch are hoping to seal deals with prospects before their old deals are pulled in coming days, Wells Fargo has a very weak pipeline to prime, according to recruiters. UBS last summer said it would cut its recruiting budget by some 40% and focus more on retention packages.
“The reputational event is largely behind them and the enhancement of the deal against the backdrop of what is happening at competitors should be great for them but their pipeline has atrophied,” said one outside recruiter who spoke on condition of anonymity. “Nothing will happen quickly but you might seem some results by Labor Day.”
A Wells Advisors spokeswoman declined to discuss specifics of the deal, whose broad outlines were reported earlier Thursday in The Wall Street Journal, but did not deny the report.
“Attracting the industry’s top talent will always be a priority for Wells Fargo Advisors,” she said.