Wells Fargo

Wells Fargo Paying Advisors to Dump Small Clients

While there are few changes in compensation structures brokers with Wells Fargo Advisors in 2016, the firm is implementing a new program that will pay reps to get rid of their smaller clients.

There are no changes to Wells Fargo Advisors' productivity hurdles for the third year in a row, nor to those around length of service and revenue growth, given to advisors with at least $400,000 in production.

But beginning in January, advisors who have clients with less than $65,000 in household assets are encouraged to hand them over to a "financial relationship advisor," or FRA. A spokeswoman for the firm said the role is a new one designed for advisor trainees who are looking for opportunities to build client relationships through warm leads.

“By transitioning these smaller accounts, clients receive more attention and advice, while at the same time, freeing up time for more seasoned advisors to focus on larger households,” the firm said. The FRAs are based at the branch, along with their client's assets, at the discretion of the branch manager.

Advisors who agree to give up the clients will be paid the greater of either the 12-month trailing gross production on the household or 40 basis points on the assets of the account.

The program is not mandatory; advisors who do not part with their smaller clients will still receive a full payout for them in 2016. But advisors who opt out will get only 22 percent of that after a year unless those accounts are grown to over $65,000. The firm did note advisors will receive a full payout on mutual fund trails, regardless of household size.

To encourage advisors to grow these smaller books, the firm is introducing a bonus to advisors with 75 percent or more clients who have $250,000 in assets.Both the compensation earned on giving away smaller clients and the bonus for higher asset clients will be paid in the form of deferred comp, the firm said.

“Unlike what some other firms are doing ... this is not a mandate to relinquish smaller accounts. Advisors have the option and will receive compensation,” according to an email memo.

The $65,000 client threshold is still much lower than Wells Fargo Advisors’ competitors. Merrill Lynch advisors only get a full payout on client accounts with more than $250,000.

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