Wells Fargo is bringing together different parts of its Wealth and Investment Management unit and reportedly exploring the sale of its Asset Management business.
The news comes about a week after the bank said several hundred financial advisors have been included in recent layoffs, which started in August, and two weeks after rival wirehouse Morgan Stanley said it was buying asset manager Eaton Vance.
Wells Fargo’s asset management business — part of the wealth unit — could be sold for over $3 billion, according to sources who spoke with Reuters for a report published Thursday. The business managed $607 billion as of Sept. 30, $307 billion of which were in Wells Fargo funds.
In the third quarter, the bank’s Wealth & Investment Management unit had a 64% drop in net income from last year to $463 million. Its total asset level was flat at $1.9 trillion.
The bank overall had a 56% year-over-year slump in profits to $2.04 billion. Earnings per share sank 55% to $0.42.
As it moves to improve results, Wells Fargo is planning job cuts that may trim up to 20% to 25% of its workforce — representing about 50,000 to 66,000 jobs, according to a report last month in Pensions & Investments.
Wealth Unit Restructuring
As for the streamlining of the wealth unit, this effort is being led by Barry Sommers, brought in from JPMorgan by Wells Fargo CEO Charles Scharf in June to lead the Wealth and Investment Management business. WIM includes the Private Bank and Abbot Downing operations.
The unit’s restructuring plan was first reported by Financial Advisor IQ early Friday.
According to the bank, “In late September, Barry Sommers … shared his vision of WIM client teams. We are bringing our brokerage and wealth businesses together into one client-facing structure.”
As of Sept. 30, the unit’s retail brokerage operations had $1.6 trillion in assets and 12,908 financial advisors, while the wealth management business had $229 million of assets.
“By creating one overarching management structure, we will simplify processes, improve how we operate, and deliver even better and faster service for our clients,” Wells Fargo added.
As part of the reorganization, Wells Fargo Advisors President Jim Hays is set to take on more “responsibility for the combined client structure,” including “the advisors and leaders serving clients in the Private Bank and Abbot Downing along with all of the WFA channels,” the bank said.
Julia Wellborn, head of Private Wealth Management, will lead client experience across WIM, as well as “the strategy and model for the high- and ultra-high-net-worth client segments across all channels,” it explained.
Both Hays and Wellborn will continue reporting to Sommers.
The latest advisor headcount of 12,908 advisors is down 815, or 6%, from a year ago and 391, or 3%, from the prior quarter. It also has dropped by 2,178 advisors, or 14%, from Sept. 30, 2016, when news of the bank’s fake-accounts scandal broke widely.
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