Wells Fargo has a problem. A problem that has been well documented at this point – their advisors are keen to bail out rather than bail water on behalf of the firm. And the quarterly drawdown in advisor headcount has made that painfully clear.
So what was the best idea from the executives at Wells to attempt to stop the bleeding? A tried and true message that resonates with almost anyone: cold hard cash.
Wells Fargo announced a new recruiting deal (in its employee channel) that matches the largest in the industry and begins to approach some of the ATH (At The High) deals of the financial crisis aftermath.
Here are the particulars:
Advisors generating > $500k in annual revenue will receive 200% upfront and another 125% in back-end bonuses based on asset transfer.
Advisors generating between $250k – $500k in annual revenue will receive 100-125% upfront and another 150% in back-end bonuses based on asset transfer.
Wow. These are astronomical numbers that match the ‘panic’ recruiting policies made through Merrill Lynch’s hallways in 2013/14 as the firm lost untold numbers of tenured and ‘at scale’ advisor teams. They aggressively recruited competitors and were willing to go as high as stroking 200% upfront checks.
Nobody could have ever foretold Wells Fargo doing the same. And even more eye-opening is Wells is willing to hand out cash to advisor doing less than a million in gross per year. This sets a new standard for buys in the $600-$700k range.
What is the upshot? Is this a panic move or is it strategic? Well, it may be one in the same at this point. Why? Because, first, it will work. Those numbers will lure people in the door. What is the phrase? “Money talks and bullish** walks”, right?
By this measure (effectiveness and advisor headcount) it is strategic. In the short term, at least. Longer term, it will balloon the balance sheet of the wealth management division of the bank, cramp regional budgets, hammer branch profitability and end up being regretted by nearly everyone other than the advisor/teams that hit the bid.
Yes, it is a panic move. Period. But it is one born out of the pain of the ‘slow bleed’ of ever dropping advisor headcount.
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