With $10M payday, Wells rewards wealth management head

If Barry Sommers' compensation package is any sign, his bosses at Wells Fargo are plenty happy with the work he's doing to reshape the firm's once-staggering wealth management unit.

A proxy statement filed on Tuesday by the bank's board of directors shows the head of wealth and investment management at Wells received nearly $10.25 million for his services last year. The same filing goes on to heap praise on the former JPMorgan wealth head who came to Wells in 2020.

Under Sommers, according to the statement, Wells' client assets under management rose to nearly $2.1 trillion — a year-over-year increase of 12% — and its wealth unit enjoyed $2 billion in profits in 2023. Sommers' bosses credited him for putting a "continued focus on advisor recruiting, improved net asset flows" and delivering on "expense efficiency initiatives." The board's Human Resources Committee also gave him 100% scores for both individual and business-related achievements.

Sommers' compensation package puts him in the top five best-paid executives at Wells Fargo. His pay consists of a base salary of $1.75 million, a $2.55 million annual cash bonus, $2.97 million in performance share awards and $2.97 million in restricted share rights. By comparison, Wells Fargo CEO Charlie Scharf made $29 million for 2023, a pay package up 18% year over year.

Beyond the scandals

It's all a sign that things are going more or less as planned at an institution still trying to come out from under the shadow of past banking scandals. Wells began losing advisors in large numbers after the firm was found in 2016 to have opened millions of unauthorized accounts for banking customers, leading to billions in fines. Just on Thursday, the firm was slapped with a new lawsuit alleging it hadn't done enough to help customers hurt in the scandal.

A Wells Fargo spokesperson said no one at the firm was available to comment for this article.

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Part of the firm's goal in promoting Sommers in 2020 was to slow a steady outflow of financial advisors. The firm stopped reporting its advisor headcount after the fourth quarter of 2022, when the number stood roughly at 12,000. That was down by almost 2,000 from four years before.

A recent report by the recruiting firm Diamond Consultants questions if Wells has truly put its scandals in the "rearview mirror" or if "the reputation damage is too severe."

"They should be an attractive home for top advisors, but too many balk at the prospect of having to call clients and prospects using the Wells name," according to the report.

But another industry recruiter, Philip Waxelbaum, the founder of Masada Consulting, said Wells Fargo is in the midst of a clear turnaround success. And much of the progress the firm has made on the wealth management front is directly due to the work of Sommers and the team he has helped assemble, he said.

Waxelbaum, who works with Wells, said the firm has largely been able to move past the scandals in the public mind.

"They were the largest consumer bank in the world when this started," he said. "They're still the largest consumer bank in the world. So this supposed reputational damage does not resonate out to the general public."

Streamlined and simplified

Waxelbaum credited Sommers and his team for bringing Wells' three distinct advisory channels under unified management. The firm now offers its traditional wirehouse, Wells Fargo Advisors, along with its bank-based financial planners and FiNET, which provides support to advisors who want to run an independent business.

Ron Edde, another industry recruiter and the president and CEO of Millennium Career Advisors, said Wells took a step toward simplification when it divided the U.S. into four regions and made a single director in charge of recruiting in each one. That reorganization gave advisors a single point of contact to learn about the firm's various advisory channels.

Edde, who also works with Wells, said wealth managers who are on the verge of leaving a firm are often unsure if they want to go independent or step into another wirehouse role. Before the reorganization, recruiters for the separate channels did not necessarily have much of an incentive to work together.

"If I was one of the FiNET recruiters and someone asked me, 'Tell me about the wirehouse,' I'd wonder if I said something positive about the wirehouse if I'd be cutting my own throat," Edde said. "So there was an internal conflict."

Advisors now coming to the firm first talk to one director who tries to work out which of three channels is the best fit. That helps streamline recruiting by preventing wealth management prospects from having to hear from representatives of different aspects of the business.

"Let's give credit where credit is due," Waxelbaum said. "There was no firm that had this kind of unification until now."

One of the firm's biggest draws continues to be FiNET, short for Wells Fargo Advisors Financial Network. The independent channel remains unique among Wells' direct wirehouse competitors.

"We really do believe that five years from now the independent channel will be our biggest channel," Sommers said in an interview with Bloomberg last year. "We're not sitting there worrying about margins. We're worrying about building the right platform for advisors and clients."

Sommers' changes have also come along with further shuffling in the executive ranks. In May 2022, the firm announced it had made Sol Gindi (also formerly of JPMorgan) head of Wells Fargo Advisors. That was followed in June by the hiring of yet another ex-JPMorgan executive, Barry Simmons, who was made head of national sales at Wells Fargo Advisors. In January came the announcement it had appointed Brendan Krebs, a former regional director, as head of advisor recruiting. And Wells announced last month the appointment of another longtime employee, Erik Karanik, to lead FiNET.

Wells is now known for some of the most generous recruiting deals on Wall Street. It also is known for having one of the most straightforward systems for advisor compensation among wirehouse firms.

Proxy points

In his few years as head of wealth management, Sommers has overseen roughly $1 billion in spending on overhauling the unit's management, streamlining its structure and improving its technology. Last month's proxy filing gives a tip of the hat to his efforts to put in place a "more disciplined process to attract financial advisor talent across all channels."

The firm's proxy statement also credits Sommers for various technological improvements. He, for instance, helped reintroduce its online brokerage, WellsTrade. Its mobile app now allows investors to trade after markets close and in fractional shares.

Sommers has also helped develop a system for opening digital accounts and introduce a new client review center "providing financial advisors with an enhanced, single client reporting tool." The proxy statement further credits him for working on the firm's Priority Credit Line, which lets clients use stocks and other securities as collateral for loans.

Perhaps most significantly for someone at a firm still seeking to distance itself from past scandals, Sommers comes in for greatest praise in his work to respond to regulatory risks. The proxy credits him for "setting a tone at the top, including expectations for his leaders to identify, understand, escalate and work with appropriate urgency to address risk issues and events."