Profit Formula will be Strumpfed
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]Too good for FA's Retro "good" Danny before the Borg got him.
they nixed it because they can’t pay a 250% upfront AND payout 75% gross…so i was told by the PF department.
Too many big producers in PF to do away with it…nearly all $1mm+ guys are in it or are in line to get in it. They’re still letting internal guys shift over, but they can only take 10-20 practices per month, so it is slow.
They’re actually losing practices now as due to the drop in production, many are better off with the straight PCG payout.