Wachovia Stops Recruiting Profit-Formula Brokers - Sources Of DOW JONES NEWSWIRES

NEW YORK (Dow Jones)--Wachovia Securities, a unit of Wells Fargo & Co. (WFC), recently put a hold on recruiting financial advisers for its profit formula group, according to people familiar with the situation.

The group is an offshoot of Wachovia's traditional brokerage, the private client group, and has been attractive to advisers because it allows them to operate somewhat independently from the firm. Brokers in profit formula are responsible for their own expenses but can receive a higher payout than some private client colleagues who typically earn 40% to 45% of their trailing 12-month production.

This group differs from the independent channel, however, because brokers can still receive various perks from their affiliation with Wachovia.

One recruiter said he views the move as Wells Fargo telling Wachovia that "giving brokers high upfront checks and high payouts doesn't make sense in this environment."

A spokeswoman for Wachovia Securities said the firm declined to comment on its current recruiting practices while it completes its integration with Wells Fargo.

Wachovia Securities recently adjusted its recruiting deal to base its payouts for financial advisers on three months' production rather than the standard industry practice of 12 months. The signing deal was altered to get a more accurate reading of brokers' production based on current market conditions.

In 2009, Wachovia had recruited 355 experienced financial advisers, as of Feb. 20, who had more than $181 million in combined production and managed more than $23 billion in client assets.

-Brett Philbin, Dow Jones Newswires; 201-938-5393; [email protected]

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