Wells Fargo moves to simplify pay plan for advisers
'I really think that our financial advisers are going to be happy about this,' one Wells Fargo executive said.
Executives at Wells Fargo Advisors are rolling out the firm’s 2022 compensation plan for its 12,552 financial advisers and registered reps this week, in what they hope will be viewed as a simpler and potentially more lucrative plan than in years past.
For example, the firm is reducing the number of compensation hurdles its private client group advisers will face each month from three to one, according to executives familiar with the plan, which was to be discussed with advisers Tuesday. Wells Fargo Advisors is also dangling an additional $5,000 in deferred compensation for advisers who qualify.
Each financial adviser will have a monthly hurdle of $13,500; the below-hurdle grid rate is 22%, or 22 cents per dollar of revenue. Revenue above that rate will generate a 50% grid rate, or 50 cents per dollar of revenue, for the adviser.
The 2021 grid, or pay plan, is more complicated, executives said, with various private client group advisers facing up to three hurdles to get the higher payout. This year, the monthly targets or hurdles range from $12,500 to $14,250.
The 2022 compensation plan for Wells Fargo Advisors was to be introduced Tuesday afternoon.
“I really think that our financial advisers are going to be happy about this,” said John Alexander, whose title is head of divisional network at Wells Fargo. “I’ve been here more than 20 years and we’ve never had a better [compensation] plan.”
Like its competitors, ranging from Merrill Lynch to Raymond James Financial Inc., Wells Fargo Advisors has enjoyed a bountiful 2021, with the broad stock market rising roughly 25% so far this year and advisers generating more revenue than ever. This year, Wells Fargo Advisors reported its advisers on average produce $1.08 million in annual revenue.
But the broad wealth management lines of business have been under scrutiny. Wells Fargo CEO Charlie Scharf this year took the chainsaw to some wealth management businesses as he works to reorganize the giant bank.
For example, Wells Fargo sold its asset management business for $2.1 billion, shuttered its international group of financial advisers and dropped the Abbot Downing name for managing ultra-rich clients’ money. And in October, Scharf said that the bank had “underinvested” in its online brokerage and independent adviser businesses.
As Wells Fargo rolls out the new pay plan, Alexander said that the firm is listening to its advisers and the objective is to simplify how advisers are paid.
“We heard from our advisers that our plan was too complicated,” Alexander said. “We heard that loud and clear.”
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