After completing its merger with Wells Fargo, Wachovia outlined its retention and branding efforts to advisors on February 20: Retention bonuses are not being offered, and the advisors will be renamed Wells Fargo Advisors in May.
“We looked at the issue of paying retention bonuses and concluded that it wasn’t appropriate,” said Wachovia Securities spokesperson Anthony Mattera. The level of public scrutiny given current economic and financial conditions, the market downturn and its impact on clients’ portfolios, and the fact that the Wells Fargo merger isn’t changing how advisors operate were some factors under consideration, he explains.
“The traditional retention bonus isn’t the way for us to go in this environment,” Mattera says. “But we did want to do something for advisors and also help clients.” Thus, the firm is refocusing on its “4front” best-practices program, which was rolled at a few years ago. 4front aims to encourage advisors to expand their fee-based business by rewarding them for high customer satisfaction and loyalty.
The Wachovia side of Wells now includes about 14,300 advisors. This represents 11,900 advisors who have been employees of Wachovia and A.G. Edwards, about 1,600 Wachovia bank-based Series 7 advisors, some 650 independent advisors, 160 Latin America-focused advisors, and related Series 7 staff. (In addition, Wells Fargo has more than 1,000 Series 7 advisors of its own.)
For 4front, advisors must complete financial plans using the company’s Envision software for at least 25 households with $250,000 in assets under management and up in order to earn up to 50 percent of their trailing-12-months sales/commissions/fees or production.
FAs also can earn between 25 to 75 basis points on assets held by such clients. According to the firm, the basis points earned are applied retroactively after an advisor crosses each threshold of 25, 50 and 100 households.
All FAs are eligible to participate and can choose to be paid upfront through a loan option, or in monthly installments, paid over a 108-month period beginning in September 2010.
There are also three advanced levels of 4front tied to (1) establishing advisory relationships, (2) client advocacy and net new money, and (3) holistic advice, including an asset and liability requirement. FAs who implement these additional 4front levels are eligible to earn additional deferred compensation. This compensation is capped at $500,000.
“Our thinking is that this is a tough time for advisors and clients, and therefore we want a program to address both clients’ and advisors’ concerns,” Mattera shares. “This program means that both sides should be satisfied, and that’s the best way to encourage people to stay, as opposed to traditional retention plans. This makes our company a compelling place for advisors to stay and run their business.”