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Wells Fargo Wealth/Brokerage Client Assets Decline; Asset-Based Revenue Up

Wells Fargo Wealth/Brokerage Client Assets Decline; Asset-Based Revenue Up

Wells Fargo’s wealth brokerage and retirement businesses reported third quarter income of $291 million, up 14 percent versus the year ago quarter, while revenue for the division was down 1 percent from the year ago quarter. Revenues declined on losses in the division’s deferred compensation plan investments as well as lower ARS [auction rate securities] recoveries and transaction revenues. But asset-based revenues were up—despite a decline in client assets. Cross-selling of banking products was also up a hair to $10 billlion, while total financial advisors rose 1 percent to 15,188.

Total wealth brokerage and retirement assets slipped 3 percent to $1.3 trillion versus the year ago quarter. That breaks down like this: Assets in the retail brokerage division, which serves affluent investors, were off 3 percent to $1.1 trillion; client assets in the wealth management division, which caters to high-net-worth investors, were also off 3 percent to $191 billion; IRA assets fell 2 percent to $261 billion. Only institutional retirement plan assets grew, to $228 billion, up 3 percent.

Asset-based revenues were up in the retail brokerage and wealth management divisions, however. In retail brokerage, managed account assets rose 9 percent to $20 billion. In the wealth management segment, asset-based revenue from investment and fiduciary services was also up 9 percent from 2010.

Expenses were down 5 percent in the wealth brokerage and retirement business for the quarter, due to lower deferred compensation expense and reduced broker commissions, the firm said in its report.

Since the merger with Wachovia, average deposit balances are up 36 percent and loans originated through brokers are up 67 percent. The third quarter of this year also marked the 10th consecutive quarter of positive net flows into brokerage managed accounts.

Overall, Wells Fargo reported net income of $4.1 billion for the third quarter, up 21 percent versus the prior year, but revenues slipped to $19.6 billion, down from $20.9 billion in the year ago quarter.

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