For Wells Fargo, no sentimental commercial waxing nostalgic with stage coach imagery can help them now. Although it may be hard for the executives at Wells Fargo to stomach, the downward spiral of the company is in full effect, as evidenced by recent mid-year statistical reports.
The Wells Fargo second quarter results send a strong message from their customers. Every division of the company – from wealth management to banking and corporate – lost revenue. Further, the return per share for investors was a horrific 98 cents, attributable to the hefty $481 million tax charge levied as part of the company’s mortgage scandal. The signal which these numbers send is loud and clear – customers don’t trust Wells Fargo and do not see the bank as a successful partner in helping them meet their financial goals.
Beyond the loss of revenue and respectability that such sentiments by their customer base causes to the Wells Fargo enterprise – the true sinking of the ship can be seen in the number of advisors who have chosen to leave the company for smaller, independent firms such as Raymond James. According to Financial Planning, 133 advisors made moves so far this year with a whopping 60% of them coming from Wells Fargo.
While to some this news may be shocking, in the recruiting space we are not the least surprised. An advisor’s decision to move firms comes down to three key areas: resources, culture, and compensation. Taking a look at the Wells Fargo story, resources to support advisors are in short supply as management time is seemingly focused exclusively on daily damage control to enable the company to remain somewhat relevant now and in the months to come. Company culture is Wells Fargo’s true Achilles heel. How are the company’s advisors to be expected to come into the office, meet sales goals, and service clients with positivity when the company is constantly getting its teeth kicked in for what many consider to be continued illegal and questionable business practices? Lastly regarding compensation, the numbers tell the tale themselves as falling company revenues mean falling advisor paychecks.
With so many reason to go, the fact that Wells is losing advisors in droves makes perfect sense and it is interesting what former Wells Fargo advisors are conveying by choosing RIA, Hybrid, and Independent firms as their new homes. The financial services landscape has changed in such a way that favors a smaller firm with the management structure, staff size, and dynamic resource support that keep a company nimble and able to adjust rapidly to change. Smaller firms also are culturally more open to all employee ideas, not just edicts from the C-Suite, and thus foster a creative and solutions oriented environment that proves very attractive to today’s customer. Also, with fewer compliance restrictions and the ability to chart their own course, advisors reap the financial benefit of income driven by their personal dedication and commitment to performance.
With RIA, Hybrid, and Independent firms boasting such inclusive, stable, and resourceful corporate attributes it is no wonder Wells Fargo advisors see joining their ranks as having nothing but upside. Smaller firms are everything Wells Fargo is not. Further, Wells Fargo veered off course quite some time ago – not just recently as they would like to have you think with their ‘sorry you caught us, we made a mistake’ messaging. The financial means, management wherewithal, and at least some modicum of respectability simply don’t exist for Wells to survive and stop what will continue to be a hemorrhaging of customers, revenue, and advisors in equal measure. The only question that seems to remain is how long will it take?
