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Wells Fargo Launches RIA Channel

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Wells Fargo Advisors rolled out its channel for registered investment advisors on Tuesday, becoming the first of the four wirehouse firms to do so. The firm intends to use the affiliation option in its push to add fee-only RIAs, but existing advisors with Wells Fargo, including employee advisors and independent reps in the Wells Fargo Financial Network channel, can also move to it.  

(WFA President David Kowach described the bank’s intentions to move into the RIA space in early December at the 2018 MarketCounsel Summit meeting in Las Vegas.)

The program will allow RIAs to custody assets via Wells Fargo Advisors’ subsidiary First Clearing and use TradePMR, an outside firm, as their broker-dealer and source of office support. The RIAs affiliated with TradePMR can access Well Fargo’s bank products, trust services and related options, such as Envision investment planning software.

“We are adding a new affiliation option … to attract fee-only independent advisors, as part of our [daily] recruiting efforts for all our models,” said John Peluso, head of First Clearing, in an interview. “We are excited to grow by attracting financial advisors in motion.”

TradePMR will support advisors moving to the RIA channel and work with them to access its own advisor technology, Fusion, and Wells Fargo’s desktop technology, SmartStation, according to TradePMR founder and CEO Robb Baldwin, a former RIA.

WFA and TradePMR executives have been in contact since 2011. “This is not a knee-jerk reaction. It’s a long-term strategic play to open up a new channel to compete for talented advisors in motion. We’ve been discussion for some time about this and glad it is here now.”

The first advisor moved to the new channel earlier in January: Carl A. Schultz of Berwyn, Pennsylvania. Hewas an employee advisor for the past 15 years with Wells Fargo and has been in the business for 38 years.

“There’s been quite a bit of interest so far, and we expect more practices to follow,” said Peluso. While moving to the RIA channel requires due diligence on the part of the advisor, “We are finding that advisors that come to us are already educated about the opportunity to go fee only.”

‘New Territory’

“Though this is new territory for sure, Wells Fargo Advisors has always believed in choice, and this is another choice — a logical extension,” Peluso said. “Conditions in the marketplace change, and the needs and expectations of [investor] clients shift — so our advisors need ways to be moving, too.”

As for how attractive the Wells Fargo Advisors’ brand is given the scandals at the bank for the past two years or so, Peluso remains upbeat. “For those who know us and work with us, they know we are an organization that puts clients first and will continue to operate putting clients first always.”

As of Dec. 30, Wells Fargo had 13,968 advisors, down nearly 600 from a year ago and about 100 from the prior quarter. Since the bank’s fake-accounts scandal erupted in fall 2016, when it had 15,086 registered reps, the bank’s wealth unit has lost 1,118 reps.

Total assets also are declining. They stand at $1.7 trillion, down 10% from last year due to lower market valuations and net outflows, the bank says.

The unit’s net income was $689 million for the quarter, though, which is up 2% from the year-ago period but down 6% from the third quarter.

Average loan balances of $75 billion, however, rose 3% from last year, mainly thanks to growth in nonconforming mortgage loans. Referrals resulting from the wealth unit’s community banking partnership totaled $10.1 billion, down 2% from 2017.

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