Wells Fargo is set to move into the RIA space next year, according to Wells Fargo Advisors President David Kowach, who spoke at the MarketCounsel Summit meeting in Las Vegas on Tuesday.
One day later, the news is getting mixed reactions from industry consultants.
“It’s a smart defensive move to start to help mitigate [advisor] attrition, and it’s a smart brand move as they move toward the RIA gold standard,” said David DeVoe, head of the consultancy DeVoe & Co., in an interview from MarketCounsel.
But having an RIA option “is not going to change the point of view of a departing advisor,” explained Tim Welsh, head of Nexus Strategy, who is also attending the conference. “If a [Wells Fargo] advisor has decided to leave, that’s what they are going to do.”
The attrition issue is significant. Since the bank’s fake-accounts scandal erupted in the fall of 2016, Wells Fargo Advisors has had a net loss of 1,012 registered reps. As of Sept. 30, its advisor headcount was 14,074 — which is down 490 from a year ago and 152 from the second quarter of 2018.
Over the past week or so, WFA has lost reps to Stifel Financial, Raymond James and Ameriprise, for instance, and a branch manager to RBC Wealth Management.
Can an RIA pilot program help dissuade advisors from leaving due to the bank’s negative headlines?
“Absolutely not. There is no hope for that, since the damage has been done and [Wells Fargo] is working its way out of that now,” Welsh said.
While choice is good for advisors, Wells Fargo already gives them an independent option with its Financial Network or FiNet channel.
The bank’s RIA pilot plan sounds like “one branch here, another one there,” which means the organization “is not making a big change at that pace,” according to the consultant. “Unless you have hundreds of offices and locations, it’s no more than a blip on the radar.”
For its part, Wells Fargo said in a statement that the RIA plans described by Kowach show it is “always looking for opportunities to enhance our offering to advisors and clients … that could make sense for our business.”
According to Dennis Gallant of the consultancy Aite Group, Wells Fargo’s news acknowledges the fact that “the world is going fiduciary.” Giving the RIA approach a try “is a natural progression for all firms … across the brokerage industry, with or without the Labor Department’s fiduciary rule,” he explained.