Head of financial advisor integration
When Kimberly Ta brought a new plan to boost advisor retention to her boss at Wells Fargo Advisors, Erik Karanik, two years ago, he initially turned her down.
Wells already had what Karanik considered a robust succession-planning initiative, with 89% of financial advisors who went through the program staying on. But Ta, a two-decade Wells veteran, saw a pattern in the data: When a young Wells advisor participated in the program to take over the business of a retiring advisor, they typically stayed until they were done paying for the business — and then they left, at a rate three to four times higher than average.
The problem was all the more acute because Wells was losing hundreds of advisors a year overall at that point.
Ta showed these figures to Karanik and proposed a revamp of the succession-planning process, eventually winning his approval in 2019 to launch the Summit program, which now encompasses 1,200 financial advisors with assets producing more than $1 billion in annual revenue.
The retirement cliff causes a concentrated business risk for Wells, said Ta, now the head of financial advisor integration. “Seventy-five percent of our revenue as a company is being managed by people who are already retirement-eligible,” she said, noting that the average retirement age of Wells advisors is 69.
The idea behind succession planning is that, when advisors retire, they typically want to sell their businesses, while the companies where they work want to hang on to those clients and their assets. Through a succession program, a younger advisor can buy the retiring adviser’s business, helping solve the company’s retention challenge.
Ta’s twist on this industrywide idea was to move Wells beyond just facilitating the transaction between the younger and older adviser, Karanik said.
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Ta designed a program where Wells would essentially buy the retiring advisor’s book of business on behalf of the younger advisor, who would have to earn it by staying with the company for 13 years. First, the two advisors would team up for about three years, working together on accounts so that the clients developed a relationship with the younger advisor. Then, when the older advisor retired, the clients would be more likely to stay with Wells.
“Ultimately, the client always has the choice, but we’ve found with that one-year-to-five-year warm handoff, you can really retain that client,” Karanik said.
Any Wells advisor nearing retirement can sign up; a junior advisor needs only to be registered to be in the program.
Wells’ diversity-recruiting efforts have benefited because advisers themselves don’t have to source their own successors, opening doors for candidates who might not have previously received a chance to buy an advisory business. “When the firm is putting up the capital to do the financing, that’s one less barrier to unconscious bias on the part of the seller — who is more often than not a white man,” Ta said.
For Karanik, watching Ta get the Summit program started brought to the fore what he considers the core of her leadership skills: active listening, creative problem solving, and a capacity for hard work.
“I look forward to working for her someday,” he said.
Nominating executive: Barry Sommers, chief executive officer, wealth and investment management
What he said: “Kim had a big problem to solve — how to stop advisers from leaving and how to support up-and-coming advisors by creating growth and partnership opportunities,” said Sommers, who was effusive about the “incredibly successful” Summit succession program she created.
“It provides incentives for both the retiring adviser and the acquiring advisor, which is an industry first,” he said.
Sommers also credited Summit with helping Wells retain $1.2 billion in client assets since its launch a little over a year ago.
