Wells Fargo & Company (WFC), the embattled San Francisco-based bank that recently launched the new online trading service WellsTrade, is boosting the money it pays its top brokers and advisors in an effort to reach wealthier clients.
Citing executives at Wells Fargo, Reuters reported that the bank is giving top performers a raise of as much as $40,000 in 2018. That means Wells Fargo will pay more of its brokers a high salary than it has in the past, in part because the brokers can also qualify for benefits at the company. The company has 14,500 brokers, noted Reuters. "This is a big thing for us culturally to encourage people to continue to evolve their practices as we march toward the next stage of the advice business," Rich Getzoff, head of Wells Fargo Advisors' east coast business, said in a phone interview with Reuters.
The pay raise for brokers comes as Wells Fargo is trying to expand the business it does with wealthier clients. The company has long been seen as a retail brokerage that serves regular investors, but with competition heating up and the company faced with hefty costs associated with regulatory issues from its fake account scandal last year, profits have been hurting. Brokers have in turn been looking for wealthier clients that could use the hand-holding more than retail investors. While Reuters noted that Wells Fargo does not have a minimum investment amount for new clients, brokers are being encouraged to send customers with less than $200,000 to bank branch brokers, WellsTrade, the robo-advisor platform or its call centers.
The brokerage business is not the only area that is struggling at Wells Fargo. The company is also having a tough go of it within target-date mutual funds, seeing large outflows at a time when this type of investing is receiving more interest. Overall, target-date funds are expected to end the year close to the all-time high of $69 billion set in 2015. So far this year, there has been $50 billion of inflows into these funds, which become more conservative in their investment choices the closer shareholders get to retirement. However, Wells Fargo, which Pensions & Investments magazine says is the 11th-largest manager of target date mutual funds, is seeing the opposite. Citing Morningstar, Pensions & Investments reported that so far this year, $4.4 billion of money invested in target-date funds has left the San Francisco-based financial services company.