John Peluso, president of Wells Fargo Advisors Financial Network, says the independent channel of Wells Fargo had a very good 2011, and he expects the group to have an even better 2012.
“In general, FiNet’s yearly growth target is to help FAs open up between 75 to 100 new practices a year. And we believe this is sustainable,” he said in a recent interview. “Including solo practitioners and teams, this entails about 140 to 200 advisors per year joining FiNet.”
An important trend, both he and experts say, is that larger teams have been exploring and moving to independence with higher yearly fees and commissions than in the past. “We should continue to see this trend and strong organic growth, i.e. same-store sales,” noted Peluso.
“We want mature business owners to join us, and we are best positioned to help them grow the business,” said the executive, who joined the industry in 1988 at Wheat First Securities. “We hope to grow in the double digits going forward, in terms of revenue.”
The average production of FiNet’s roughly 1,100 advisors is about $530,000, or $1.05 million per team. Prospective FiNet reps that Peluso and his colleagues are talking to these days are generating even greater production, he says.
“The pipeline is bigger and better in terms of independent reps and teams,” explained Peluso. “This started in the second half of 2011 and is continuing in the first half of 2012.”
Still, going independent is not for everyone, he admits, and that “is a long-term trend.” Nonetheless, there are probably three out of every 10 advisors exploring this option today vs. about 1 out of 10 in the past five to 10 years.
“Not all advisors are capable and want to run a small business,” shared Peluso. “FiNet is about making that move as simple as possible. There are myths in the marketplace [about going independent] and through a partnership with us, we demystify this process.”
The advantage FiNet offers, he notes, is that advisors have access to the resources of Wells Fargo: “We marry that with the advisor’s ability to own and operate his or her own business. This is what makes us attractive to reps.”
These are the pull factors. Push factors, Peluso shares, include events, like the ending of an advisor’s retention loans, changes in branch management and complexes, mergers & acquisition and integration. “When events happen in the industry, we want to be top of mind for advisors,” said the St. Louise-based executive.
As more time passes since the peak of the financial crisis, he explains, advisors “are gaining more confidence and are more likely to contemplate making a move.” About 70% of recruited FiNet advisors come from a wirehouse, 15% from other national firms and 15% from Wells Fargo’s private-client operations.
“I don’t see this changing much. It’s been a steady state for a while,” Peluso noted. “We are not right for all. But for those we are right for, we are spectacular, and they can’t wait to get here.”
Making the Jump
Gary Gould of Gould Capital LLC in Tacoma, Wash., came over to FiNet from Merrill Lynch a year ago. “We have about $140 million in assets and do about $1.8 million in production,” said Gould, who is joined in the practice by his father Charles and brother John.