Wells Fargos Wealth, Brokerage and Retirement unit weathered a slow third quarter as the firm celebrated the five-year anniversary of its announcement in early October of 2008 that it planned to acquire Wachovia.
- Read more: Wells Fargo Adds Advisors From Merrill, UBS
For the quarter, revenue remained mostly steady for the unit, rising one percent from last quarter. The firm posted a $450 million profit, up from $434 million last quarter, after benefitting from a $38 million boost from a reversal in provisions for credit losses. Excluding that lift, the units profit fell $12 million from the second quarter as transaction revenue and commissions slowed and expenses rose.
Revenue was in line with prior quarter as increased net interest income was mostly offset by lower brokerage transaction revenue, the firm said in its earnings release, which attributed the decline to seasonality.
The firm said that broker commissions also fell in the third quarter, although they were up for the year. Otherwise, non-interest expenses rose three percent to $2.6 billion.
That was offset by an increase in assets and fee revenue, the firm said. Client assets were up eight percent year-over-year to $1.3 trillion. Managed account assets in the retail brokerage rose 18% from the prior year to hit $53 billion. The firm attributed that growth to strong market performances and net flows.
In line with industry trends, the firm has been changing its compensation models to encourage advisors to do more financial planning work with clients, according to Danny Sarch of career consulting firm Leitner Sarch Consultants. Theres an overall trend in the industry to increase fee revenue even if it comes at the expense of commission revenue, he says.
The Wealth, Brokerage and Retirement division continued to improve its cross-selling business as the ratio of products per household rose from 10.27 a year ago to 10.41 in the third quarter. We also deepened relationships, resulting in increases in cross-sell across the Company, Wells Fargos chairman and chief executive John Stumpf said in the release.
Recruiting continued to tick up as the firm reported it had 15,285 advisors across all its channels, up from 15,268 in the second quarter and up one percent from 15,167 last year.
More information on the firm-wide performance available here.