While Wells Fargo’s third quarter earnings were 33 percent higher than the same period last year, advisors continue to walk out the door in the wake of scandals at the firm. Advisor headcount fell 1 percent on a sequential basis to a total 14,074, compared to 14,226 in the second quarter. Headcount is down 3 percent from a year ago.
One such advisor is Joey Sager. Consumer bankers opening fake accounts, burdensome sales quotas and finally a request by the Justice Department to conduct an independent investigation into Wells Fargo’s wealth management business eventually drove Sager to explore his options in 2017. He recently joined the registered investment advisory, Venturi Wealth Management.
“In the third quarter, we continued to make progress in our efforts to build a better Wells Fargo with a specific focus on our six goals: risk management, customer service, team member engagement, innovation, corporate citizenship and shareholder value,” CEO Tim Sloan said in a statement. “We are strengthening how we manage risk and have made enhancements to our risk management framework. We also continued to make progress on customer remediation, which is an important step in our efforts to rebuild trust.”
The firm recently rolled out a new online tool for its advisors, Envision Scenarios, which can model how hypothetical changes in a client’s investments or how investing decisions could impact their financial goals.
The firm’s wealth and investment management business reported net income of $732 million during the quarter, up 2 percent from a year ago and 64 percent sequentially. That business includes Wells Fargo Advisors, The Private Bank, Abbot Downing, Wells Fargo Institutional Retirement and Trust, and Wells Fargo Asset Management.
Total client assets in the segment were $1.9 trillion, up 2 percent year-over-year, which the company attributed to the higher markets. That was offset by net outflows. Within the retail brokerage, advisory assets were $560 billion for the quarter, up 7 percent from a year ago due to the market appreciation.
Referrals coming from the firm’s community banking partnership were down 7 percent sequentially and flat year-over-year.
Overall, the bank reported earnings of $6 billion, or $1.13 a share, up 33 percent year-over-year. That missed analysts’ expectations by 6 cents, according to SeekingAlpha.com. Revenue was $21.9 billion, up 0.4 percent year-over-year, beating expectations by $100 million.
The firm’s earnings included a $638 million gain on the sales of $1.7 billion of Pick-a-Pay PCI mortgage loans, a $605 million operating loss related to remediation expenses, a $100 million reserve release and an effective income tax rate of 20.1 percent.