Although Wells Fargo Advisors lost advisors in the first quarter compared with a year ago, it gained assets under management.
The advisor group lost 258 financial advisors, dropping to a total of 14,399 advisors, at March 31, compared with a year earlier. AUM rose 10 percent, to $540 billion from $490 billion, according to the first-quarter earnings report for parent company Wells Fargo.
From 2017’s fourth quarter, AUM for the advisor group fell by $3 billion and the number of advisors dropped by 145. Wells Fargo Advisors, part of the Wells Fargo Wealth and Investment Management unit (WIM), said the 1 percent decline in the number of advisors in the first quarter is a statistically flat result and consistent with demographic trends.
“[First quarter’s 1 percent decline … is far outweighed by improvements in [financial advisor] productivity, which grew by 7 percent year over year,” said Wells Fargo Advisors. “This is directly related to our investment in best-practice resources for experienced advisors, as well as training and succession programs for next-generation advisors.”
The report showed that net income attributable to WIM increased by $39 million, to $714 million, in the 2018 first quarter from 2017’s fourth quarter, and was up $49 million from the same period last year. Well Fargo attributes the gains to the lower corporate income tax rate that president Donald Trump signed off on in January.
“We are seeing strong revenue growth and feel good about our pipeline of experienced recruits and new trainees joining our advisor teams,” stated WFA. “We continue to take a disciplined recruiting approach, and it’s working.”
The Wells Fargo WIM unit’s image has been affected by the retail banking scandals revealed in 2016, government agencies scrutinizing the company’s mortgage and auto lending practices and a recent accusation from some clients of the wealth-management division that they were steered into unsuitable investments.
Wells Fargo said in the first-quarter report that the Consumer Financial Protection Bureau and the Office of Comptroller of the Currency have collectively offered to resolve issues with its compliance and risk management program and other past practices for an aggregate of $1 billion in civil penalties. Reuters reported that the billion-dollar fine was for the auto insurance and mortgage lending probes that occurred earlier this year.
“I’m confident that our outstanding team will continue to transform Wells Fargo into a better, stronger company; however, we recognize that it will take time to put all of our challenges behind us,” stated Tim Sloan, the CEO, in the report.