Wells Fargo is consolidating its brokerage services under the Wells Fargo Advisors unit. Brokers in Wells Fargo’s wealth management services unit will no longer fall under the supervision of the private bank, but WFA instead.
The San Francisco-based bank’s wealth management services previously housed the private bank and wealth brokerage services (WBS), and were headed by president Jay Welker. WBS will now join its other broker peers under the Wells Fargo Advisors umbrella, the bank’s traditional wirehouse. Jim Hays, the head of WBS, previously reported to Welker and will now report to David Kowach, the president and head of Wells Fargo Advisors.
Spokeswoman Shea Leordeanu told Financial Advisor magazine, “WBS has always been a part of the broker-dealer’s legal entity and supervision.” The siloed businesses structure of the bank was forged after a series of mergers and now Wells Fargo is taking steps to “simplify” its businesses.
She added, “All of the broker-dealer advisors will now be in the broker-dealer.”
News of this came after Jon Weiss, the head of wealth and investment management, announced through a division-wide memo the bank’s anticipated plans to restructure the unit.
“We manage too many basic processes and functions in silos, which is costly and limits our effectiveness across the business,” wrote Weiss. “With this in mind, we will begin assessing opportunities to consolidate operations and processes to improve efficiency, reduce operational risk and support an enhanced technology and digital platform.”
The memo included notice that the division is looking to fill a new role for an operations executive who will report to Weiss. The role involves overseeing the wealth and investment management operations and leading the consolidation process.
Reports surfaced in June that Wells Fargo and Co. would restructure its wealth and investment unit that houses Wells Fargo Advisors; the private bank; Abbot Downing, a service for ultra-high-net-worth clients; Wells Fargo Asset Management; the bank’s institutional retirement business; and the Investment Institute. WFA, the private bank and Abbot Downing directly provide services to clients, Leordeanu told Financial Advisor.
The Wall Street Journal was the first to report that the private client group, a select group of financial advisors within WFA and the subdivision’s largest line of business, would merge with WBS. Wells Fargo Advisors has a total of about 14,200 advisors, according to Leordeanu, who said she could not give exact numbers for each subdivision. However, WFA’s website shows a little over 9,400 advisors in its traditional brokerage unit, about 3,400 in its in-bank brokerage channel, and around 1,300 from its independent brokerage WFA Financial Network.
Wells Fargo’s restructuring comes at the heels of a series of scandals involving its banking and wealth management businesses that pushed it to announce in March it would conduct an independent review of its wealth management division.