Wells Fargo & Co. said client assets handled by its wealth management business fell 2 percent in the fourth quarter, compared to the end of 2010. And total client assets in all its wealth, brokerage and retirement businesses fell 3 percent, to $1.3 trillion.

Even so the diversified banking and financial services firm, which operates more than 6,000 retail branches, said net income in those businesses increased significantly.

All told, its Wealth, Brokerage and Retirement operation reported net income of $325 million in the fourth quarter. That was up $34 million or 11.7 percent from the third quarter of 2011 and up $128 million or 65.0 percent from the fourth quarter of 2010.

Revenue was $3.1 billion, up 6 percent from third quarter 2011. That came partly as a result of $59 million in gains from investments in deferred compensation plans, compared to $128 million in losses in the prior quarter.

The company also recorded a $153 million gain on the sale of its H.D. Vest Financial Services brokerage and tax-advisory unit to Parthenon Capital Partners, a private-equity firm.

Excluding deferred compensation and H.D. Vest gains, revenue was down 5 percent due to lower asset-based fees, reduced brokerage transaction revenue and lower securities gains in the brokerage business, Wells Fargo said.

Overall, Wells Fargo’s profit increased more than 20 percent, year over year.

For all its lines of business, the San Francisco-based firm reported net income of $4.1 billion fourth quarter 2011, compared with $3.4 billion in the fourth quarter of 2010, a gain of slightly more than 20 percent.

Full year 2011 Wells Fargo net income was $15.9 billion, up 28 percent from 2010.

Wells Fargo & Company said revenue reached $20.6 billion in the fourth quarter, up from $19.6 billion in the third quarter.

“We achieved these results while completing the conversion of Wachovia’s retail banking stores – the largest such conversion in banking history – and now all of our 6,239 retail banking stores are on a single platform serving customers coast to coast,” said Chairman and CEO John Stumpf.

Wells Fargo Advisors is the brokerage and wealth management subsidiary of Wells Fargo, located in St. Louis, Missouri. It is the third largest brokerage firm in the United States as of the third quarter of 2010 with its $1.3 trillion of assets under management.

Wells Fargo Advisors was known as Wachovia Securities until May 1, 2009, when it legally changed names following the Wells Fargo's acquisition of Wachovia Corporation.

Wells Fargo also manages assets for high-net-worth individuals, in its Private Bank.