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Wells Fargo Wealth Unit Boosts Profits, Releases More Advisor Data

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A Wells Fargo branch in New York (Photo: Bloomberg)

Wells Fargo topped estimates with net income of $2.99 billion, or $0.64 per share, for the fourth quarter of 2020, a 4% rise from $2.87 billion, or $0.60 cents per share, a year earlier. 

Revenue, though, fell by 10% to $17.93 billion in the quarter from $19.86 billion a year earlier and missed estimates. 

The firm also released new figures on the performance of its Wealth and Investment Management business, including the average level of yearly revenue per financial advisor. These figures have been shared quarterly by other wirehouses, such as Morgan Stanley and Merrill, for some time. 

“Although our financial performance improved and we earned $3 billion in the fourth quarter, our results continued to be impacted by the unprecedented operating environment and the required work to put our substantial legacy issues behind us,” CEO Charlie Scharf said in a statement.

While consumer and small-business banking revenue dropped 8% to $4.70 billion from the year-ago quarter, home loans rose 2% to about $2 billion. Non-performing assets, though, jumped 9% to $8.89 billion from the year-ago level of $5.65 billion.

Net charge-offs were $584 million. In addition, the bank’s earnings included a $781 million restructuring charge and a $757 million reserve release tied to the sale of its student loan portfolio.

Wells Fargo’s board has approved an increase in its authority to buy back common stock by an additional 500 million shares, which puts its total authorized amount at 667 million shares.

Wealth and Investment Unit

For the fourth quarter, the Wealth and Investment Management business saw its total revenue drop 4% year over year to $3.8 billion. Net income, however, rose 157% from the year-ago quarter to $548 million.

The number of both financial and wealth advisors in the fourth quarter stood at 13,513 — versus 14,414 a year ago and 13,793 in the prior quarter. These advisors had average yearly fees and commissions of $1.013 million vs. $1.002 million a year ago and $943,000 in the prior quarter. 

In its third-quarter financial report, Wells Fargo reported that it had 12,908 financial advisors, down 815, or 6%, from a year ago and 391, or 3%, from the prior quarter. 

Wells Fargo Advisors’ financial advisor headcount on Oct. 31 was down by 2,178 advisors, or 14%, from Sept. 30, 2016, when news of its fake-accounts scandal broke widely.

Total assets for the unit were $2 trillion as of Dec. 31, 2020, up 6% from last year. Excluding Asset Management operations, assets were $1.4 trillion.

The full unit’s headcount is 29,515 vs. 30,229 a year ago.

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