Bloomberg News Wells Fargo & Co.’s largest group of financial advisers will have to generate more revenue or meet new performance targets in 2014 in order to pocket the same cut of revenue they earned this year. But the third-largest brokerage will also give its advisers more ways to overcome or lower that monthly hurdle, Wells Fargo officials said Thursday.
Advisers with the Wells Fargo Advisors Private Client Group will be able to able to earn 50% of their revenue after earning $13,250 in fees and commissions each month, higher than the $12,000 that was required last year. Otherwise they will make just 22% of what they bring in, according to an outline of the plan shared with InvestmentNews after it was announced internally.
But advisers will be allowed to lower that hurdle to as little as $11,500 if they meet performance goals — from winning $5 million in new assets from clients to implementing of the company’s best practices on goals-based financial planning, moving client assets to the firm’s advisory platform and growing the brokerage’s lending to clients. Advisers can also receive retroactive pay by meeting performance targets in 2014.
Wells Fargo & Co. joins two of its competitors, Morgan Stanley Wealth Management and UBS Wealth Management Americas, which two weeks ago also raised the bar for advisers to earn the same share of revenue. Merrill Lynch Wealth Management, which also announced its 2014 pay plans, said it would not adjust its payout model or grid.
Switching away from a one-size-fits-all compensation model has been a priority for David Kowach, who took over the Private Client Group in 2012.
Wells Fargo is enhancing its support for advisers’ developing formal financial plans through its Envision program. Those plans are seen by industry executives as improving relationships with clients and increasing the amount of money that clients keep at the firm. UBS also recently increased the extra money added to advisers’ expense accounts for drawing up financial plans for customers by 10 percentage points.
Wells Fargo said it is also adding funds to its high-performing advisers’ expense accounts. The base rate for those accounts will be $500, but advisers who meet performance goals or earn higher revenue can receive more. For instance, an adviser who earns $500,000 but meets one of six performance goals will receive $1,500. Any adviser who earns $850,000 in fees and commissions will receive $10,000, and advisers who produce $1.5 million or more will receive $15,000.
Wells Fargo also increased the caps on deferred compensation, from 2% last year to 8.25% for adviser
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