Wachovia advisors (including legacy A.G. Edwards types) are clearly exhausted from the ride their firm has taken them on this year — and it's not over yet.
Wachovia has been near the bottom of the heap in our Broker Report Cards for the last five years. This year it was again in the bottom half: Wachovia tied for third-to-last place with Smith Barney, ahead of UBS and Bank of America Investment Services (surveyed for the first time this year), with an overall score of 6.3. Of course, Wachovia's grade might have looked quite different if our survey had gone out after Wachovia left Citi at the altar for a more lucrative deal from Wells Fargo in October. For the most part, Wachovia reps tell us they were relieved when Wells came to the rescue.
Indeed, almost a third of reps were worried enough about Wachovia's ailing state prior to the October Wells Fargo deal that they were considering getting out: Only 69 percent of respondents indicated they definitely, or probably, would be working with their current firm in two years' time.
Aside from the tanking stock price (Wachovia shares lost a whopping 89 percent of their value between October 14, 2007 and October 14, 2008), the greatest strain on advisors' relationship with management was the firm's role in the mortgage mess. After five straight quarters of losses, Wachovia reported the largest quarterly loss ever posted by a U.S. company — $24 billion in the third quarter, including about $600 million in mortgage-related write-downs. That's not something advisors wanted to have to explain to clients: Half (51 percent) of respondents to the survey said mortgage-related write-downs affected their relationship with firm management.
At this point, Wachovia FAs are waiting to hear whether they will get a retention package from new parent company Wells Fargo and, if so, what that will look like.
Wachovia Securities at a Glance
Company scapegoat: Kenneth Thompson
Share price performance*: 11/20/08 price, 52-week range:
$4.10, $0.75-$45.43
Q3 net client assets, growth (decline) vs. 07*:
$1.1 tn, 24.4%
Q3 advisors, growth (decline) vs. 07*:
14,635, (2%)
Performance of retail brokerage unit (Q1-Q3 2008)*:
Revenues: $6.1 bn
Pre-tax income: $480.6 mn
Profit margins: 7.8%
Peformance of private bank (Q1-Q3 2008)**:
Bankers: 477
Revenue: N/A
Pre-tax income: N/A
Write-downs: $71.5 bn
Bank deposits: $1.4 tn
Bank branches: 3,300
* Wachovia Securities only. **Wachovia private bank is part of the firm's wealth management division. Wachovia securities is part of capital markets.