Wells Fargo will ramp up spending to lure brokers

Wirehouse, after losing 400 brokers in first quarter, is bucking trend among rivals who have said they are going to cut back on spending big bucks recruiting veteran advisers

Hurt by the fallout from its parent bank’s fictitious account-creation revelations, Wells Fargo Advisors is using the surest tool it can to attract big producers to its ranks: cash.

The wirehouse is sweetening its signing bonuses for veteran brokers, reports The Wall Street Journal, stepping into a bidding arena from which Morgan Stanley and Merrill Lynch have chosen to retreat. Industry recruiters were told of the change early this week, the Journal said.

At the end of September, Wells Fargo employed more than 15,000 brokers, but more than 400 brokers left through the first quarter of 2017 — a drop of nearly 3%. Over the same period, both Merrill Lynch and Morgan Stanley’s head counts declined by half a percentage point, while UBS lost just under 2%, the Journal said.

Because all major firms are spending millions of dollars preparing for compliance-related aspects of the new fiduciary rule — and most are still trying to figure out how to square, operationally, the coming fiduciary standard for retirement accounts the suitability standard for other accounts — focus at the large firms has shifted away from recruitment to a degree.

UBS, Merrill Lynch and Morgan Stanley have said they are trying to cut back on spending, and each has said it will redeploy money saved from recruiting into supporting existing brokers.

Given its rivals’ retreat, “Wells Fargo now has a great opportunity,” said Michael King, a brokerage recruiter in New York.