Wells Fargo Wealth and Investment Management, the unit that includes Wells Fargo Advisors and its asset management business, took a step forward in a planned cost-cutting and consolidation move by bringing its bank-based brokers under the leadership of Wells Fargo Advisors’ head David Kowach.
The unit’s 3,500 bank-based brokers, known as Wealth Brokerage Services, would be folded into Wells Fargo Advisors, the traditional wirehouse with more than 9,500 brokers. Wealth Brokerage Services head Jim Hays will report to Kowach. A spokesperson said the changes will not result in any other immediate personnel changes. The broker/dealer was already handling the compliance and oversight for both groups of brokers and the compensation structures for each will not change.
“This shift will bring our brokerage capabilities under one umbrella to increase coordination across the channels, simplify processes, eliminate redundancies and improve how we operate—all with an eye toward better serving the needs of our changing client base,” Jonathan Weiss, senior executive vice president and head of Wealth and Investment Management, wrote in a memo delivered to employees Wednesday. “Today, we manage too many basic processes and functions in silos, which is costly and limits our effectiveness across the business. With this in mind, we will begin assessing opportunities to consolidate operations and processes to improve efficiency, reduce operational risk, and support an enhanced technology and digital platform.”
The scandal-plagued bank has been long planning an overhaul of its sprawling wealth management operations; siloed business divisions resulted in inefficient operations, misaligned incentives and turf wars over client business, according to people familiar with the bank. A Wells Fargo spokesperson said the bank was committed to giving clients a choice of channels through which to engage with the firm.
Weiss also wrote that he would begin the search for an operations executive to conduct a complete review of the unit’s current operations to trim expenses, improve the unit’s efficiency and head up a “consolidated WIM operations platform on an ongoing basis.” The new executive will report directly to Weiss and both internal and external candidates will be considered, a spokesperson for the bank told WealthManagement.com.
Wells Fargo said during an investor presentation in May that it expected efforts to cut expenses by $2 billion annually in 2018 and 2019.
In its most recent quarterly earnings report, Wells Fargo’s wealth unit reported a 1 percent drop in advisors, and a 38 percent drop in net income from the previous time period last year.