By Elizabeth Dilts
NEW YORK (Reuters) - Wells Fargo & Co (N:WFC) is giving its top brokers and advisory teams as much as a $40,000 raise next year in a broad strategy to go after wealthier clients, company executives said Friday.
The changes to Wells Fargo Advisors' 2018 compensation plan, which were sent to the firm's 14,500 brokers on Friday, also mean that the firm will pay more brokers a top tier salary than ever before because teams can also qualify for the benefits.
"This is a big thing for us culturally to encourage people to continue to evolve their practices as we march toward the next stage of the advice business," Rich Getzoff, head of Wells Fargo Advisors' east coast business, said by phone.
Wells Fargo's bank and retail brokerage have traditionally served Main Street customers. But as regulatory costs, increased competition and changing customer preference have weighed on firms' profits, brokers have had to seek wealthier clients whom they say benefit more from their advice.
"Clients who have more wealth have more complicated needs," said John Alexander, Wells Fargo Advisors. "But we're not just a high net worth firm."
Some top banks, such as Morgan Stanley (N:MS) and Bank of America's (N:BAC) Merrill Lynch, require new clients to have at least $250,000.
Wells Fargo Advisors has no such minimum. But brokers are encouraged to refer clients with less than $200,000 to brokers at bank branches or call centers, or Wells Fargo's robo-advisor platform, Intuitive Investor, which accepts clients with at least $10,000.
The new compensation plan rewards top advisers by paying them half of the revenue they generate for the brokerage if, in 2017, they made at least $2 million in revenue, and if more than three-quarters of their clients have over $750,000 with them. The broker must also be part of an internal coaching program called DELTA.
The brokerage will extend the same offer - a 50 percent pay out rate - to teams of brokers if they generated $2 million in combined revenue, and if each broker managed at least $800,000 in assets.
Brokerages traditionally pay employees a percentage of the annual revenues they make.
Wells Fargo has historically paid all its brokers based on two percentage rates of revenue that combined make up their monthly salary. The new plan makes both of those rates 50 percent for top brokers.