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Wells Fargo, led by John Stumpf, took more heat from protestors at its annual meeting even as it defeated a call for an independent review of its mortgage modifications.
April 24 -
JPMorgan Chase kicked off the first-quarter earnings season by announcing record profits, but the results did little to inspire investor confidence in bank earnings or diminish ongoing scrutiny of the bank's business and corporate structure.
April 12 -
"Financial literacy" typically means educating the unbanked. For Wells Fargo's David Carroll, it means turning the already-banked into prospective wealth-management clients.
April 10
Wells Fargo (WFC) jumped deeper into the crowded pool of managing people's wealth at the very time when most Americans were becoming poorer. It still managed to find riches — and it wants more.
The fourth-largest bank
"It's one of the few areas where you can still make money, as opposed to some of the economic challenges in the core businesses," says Teresa Epperson, a managing director with consulting firm AlixPartners.
Wealth-management is one of the
But Wells, which has spent the past four years consolidating its purchase of Wachovia and employs more than 15,000 financial advisors, is trying to create a more mass-market version of what some of its more elite competitors offer. That means touting retirement plans and training bank tellers to field questions about brokerage services, instead of hiring fleets of private bankers and building new branches
"We want you to get a very consistent experience and very consistent advice no matter where you plug into Wells Fargo," David Carroll, the senior executive vice president who oversees the bank's wealth, brokerage and retirement unit, said in an interview last week.
"People need financial advice now more than ever. This current generation and the one coming in behind it don't have defined-benefit pension plans," he added. "People are going to be forced to be more accountable for their own financial future than they ever have been in the last 100 years, and yet the world seems more complicated and riskier than it has been in a long time."
It's a complication that has paid off for the biggest banks and wealth-management specialists, largely because of the regular fees customers pay for such financial advice and related products. While median household wealth in this country
"It's a challenging market — there's been some consolidation in the past, and now what we're doing is recreating some players," says analyst Marty Mosby of Guggenheim Securities. Wells Fargo is "one of those new players on the block that really has a chance to set itself up there with the titans of Wall Street."
Wells, with its deliberately folksy culture and its lack of a big legacy investment bank pre-Wachovia, might appear to be at a disadvantage in that competition. Its brand is less entrenched in the rarified world of the 1% than those of specialists like UBS, Morgan Stanley (MS) and Bank of America's Merrill Lynch (BAC). And Carroll acknowledges that, while Wells Fargo has made an effort to attract investments from "ultra high net worth" customers with at least $50 million in assets, such business will likely remain more of an afterthought than a core focus at his bank.
"By our count, there's only about 11,000 households in this country that would fit in that $50 million and above [category]. They have some $1.5-$1.7 trillion out of the roughly $27-$28 trillion in investible assets held by U.S. households," Carroll says. "It's a small part of the landscape. It's never going to be a big business, relatively speaking, for anyone."
But it is not a business Wells can entirely ignore. In the fall of 2011, the bank
"Wells Fargo tends to be at the table when the liquidity events happen that give rise to that level of fortune," Carroll says. "It's a logical business for us to be in and to have a solution when we have clients who matriculate through the various echelons of wealth. We would hate to take the $100 million or the $500 million family and say, 'Yes, we can serve you through our broker-dealer.' We know that they have unique needs themselves."
Carroll says that assets within Abbot Downing have grown by about a third, to $31 billion, since 2011. The bank has $208 billion in overall wealth management assets, and saw asset levels in the entire wealth, brokerage and retirement unit increase 7% over the past year, to $1.5 trillion at the end of the first quarter.
Much of that growth has come from existing Wells Fargo customers. Carroll's unit excels at the bank's beloved cross-selling mission: Customers of the wealth, brokerage and retirement unit had an average of 10.33 Wells Fargo products at the end of the first quarter, and Carroll wants to do even better. He hopes to get more business from some 5.5 million households that consider Wells Fargo to be their primary bank, but have parked some $1.7 trillion in assets at other financial institutions. (Though Carroll identified that goal
He also has to decide what else to buy. Wells Fargo has
He would not identify specific targets, but says he's interested in deals that would help Wells Fargo expand its brokerage network in certain areas. "We've got a big brokerage footprint … but there's certain geographies where we'd like to have a bigger presence," he says.
Carroll also expects opportunities from Wells Fargo's competitors, especially smaller banks shedding wealth-related businesses. For example, KeyCorp (KEY)
"There are a number of smaller-scale, in-house or in-bank broker-dealers that, just as you've seen banks over the last few years shed their mutual fund operations, you might see some superregional-and-below banks further exit the retail securities business," Carroll says. And then "you've got [registered investment advisors] that are in various stages of consolidating, putting themselves up for sale, [and] you've got boutique wealth management firms," he adds, so potential targets are "sort of all the above."