Wells Fargo Advisors, which continues to see its headcount dwindle, is leaving most of its compensation program unchanged for 2020. It currently has 13,753 advisors, down 751 from a year ago.
“It’s notable that Wells Fargo, in contrast to both Morgan Stanley and UBS, left its grid intact. Payout percentages and hurdle rates are the same,” said executive recruiter Mark Elzweig.
“Wells Fargo is focused on attracting successful producers from rival firms and retaining their current salesforce,” Elzweig explained. “The fact that they haven’t monkeyed with their grid reflects that reality.”
The brokerage group, though, will have a 20% flat-rate payout in 2020 on client households with less than $250,000 in assets. That payout level currently applies to households with under $100,000.
“The new small household policy is not really a surprise. Major wirehouses want their advisors to focus on $250,000-plus households,” added Elzweig.
Overall, advisors with 75% of client households above $250,000 in assets “can [still] get a full payout … between cash and deferred compensation,” said Rich Getzoff, head of advisor-led business for WFA.
The 20% payout for households with between $100,000 and $250,000 will be assessed monthly; if a household tops $250,000 in its first year with WFA, it becomes eligible for a full-grid payout dating back to the first day.
Advisors with more than $250,000 in 12-month fees and commissions and with more than 75% of households above $250,000 in assets are eligible for full grid rates on these clients via deferred compensation, the grid plan states.
FAs with $250,000 in 12-month production with 50% to 74.9% of households with at least $250,000 in assets are eligible for partial grid rates in deferred compensation with some stipulations.
Staying the Same
Overall deferred compensation maintains the base award structure of 2019 and adds new base award tiers for 2020 — with no change to Wells Fargo’s length of service award, which stands at 0.5% of gross revenue for reps who joined in 2005 or earlier.
It includes incentives for advisors with 75% of households above $250,000 and 75% of households above $500,000 and adds an extra adoption award qualification threshold of 50% of households above $250,000.
Advisors who bring in $400,000 or more in 2020 total gross revenue are eligible for a base award. Those making up to $499,999 may get $1,000, while those generating over $500,000 could get $3,000 and up; the maximum effective base award will be 7.5%.
In terms of deferred compensation, advisors generating $400,000 in total gross revenues or more in 2020 face slightly higher production tiers for their base awards of 5-10%.
The tiers started at $550,000 in 2019. That level jumps by 15% in 2020 to $635,000. The 10% base award will apply to advisors with $6.38 million in production in 2020 vs. $5.5 million in 2019.
Adoption award rates have been trimmed. (Advisors are eligible for these bonuses if they have $400,000 to $3.1 million, or more, in gross revenue/production.)
For veteran advisors (or “repeat qualifiers”) with 75% or more household clients at $250,000 in net assets or higher, they will receieve awards of 0.45-0.90% in 2020 — down from 1.15-2.25% in 2019.
Veteran advisors with 75% or more household clients at $500,000 in net assets or higher will be eligible for adoption awards ranging from 2.1-4.2% in 2020 — down from 3-6% in 2019.
There also will be a new award focusing on non-referred business. It will have a payout of 50% in 2020, subject to certain conditions, for revenue not tied to referrals from unit within Wells Fargo or business reassignments.