Broker-Dealers Share Third-Quarter Results, Revenue Growth Plans

Wells Fargo Advisors

Wells Fargo said its wealth, brokerage and retirement unit, which includes 15,000-plus financial advisors, had revenue of $2.91 billion in the latest quarter, up from $2.87 billion in the second quarter and $2.77 billion in the same year-ago period.

Net income for the unit was $256 million, down from $270 million in the previous quarter but more than double the $111 million reported in the third quarter of 2009. Assets improved 5 percent from last quarter for the unit to $1.27 trillion, and managed-account assets were up 10 percent, the company says.

In addition, Wells Fargo reported that core deposits in wealth, brokerage and retirement grew 17 percent over the first quarter of 2009, when the merger with Wachovia took place. Loan originations by financial advisors grew 33 percent year to date.

In terms of its headcount, released separately from its earnings report, Wells Fargo says it had 15,088 financial advisors as of the third quarter, down slightly from 15,102 in the second quarter.  This keeps it in the No. 3 slot, behind Morgan Stanley and Merrill Lynch.

In addition, the company now has 4,569 licensed bankers vs. 5,094 in the prior period. When these reps are included, Wells Fargo has 19,657 financial professionals, topping both Morgan Stanley and Bank of America-Merrill Lynch, which has 16,790 financial advisors (when U.S. Trust reps are included). However, BofA says it has a grand total of 19,761 financial professionals (advisors and others) in the organization ­— beating Wells Fargo by 104.

Overall assets at Wells Fargo have remained at $1.1 trillion. Including the bank professionals, this represents about $56 million in average assets under management per advisor. Excluding the bank reps, average AUM per broker is $73 million.

UBS

In the United States, UBS wealth-management advisors put a stop to client outflows —  a significant development after five quarters of outflows, experts say, though the wealth business in the Americas had a loss of about $47.6 million. "It is certainly good news that they were able to stem negative asset flows," said Elzweig. "One helpful factor is that Bob McCann and the management team are inspiring confidence in the UBS sales force."

In the Americas, net client asset inflows were about $305 million. However, in the United States, net new money inflows were "virtually zero compared with outflows of CHF 2.9 billion ($3 billion) [a year ago], due to improved flows from financial advisor recruiting and retention," the company said in its third-quarter report.

In addition, net new money inflows from financial advisors employed with UBS for more than one year dropped slightly from the prior quarter, but remained positive for the third consecutive quarter, UBS says. Including interest and dividend income, wealth-management operations in the United States had net new money inflows of CHF 4.6 billion ($4.7 billion) in the third quarter.

Invested assets for wealth-management Americas totaled CHF 693 billion ($701 billion) as of September 30, down CHF 1 billion from last year. Total client assets, though, were CHF 743 billion ($752 billion), up slightly from the same year-ago period. For the first nine months of 2010, U.S. advisor net outflows were CHF 9.3 billion ($9.4 billion) vs. inflows of CHF 1.5 billion ($1.52 billion) in the same period of 2009.

The number of financial advisors with UBS-Americas is 6,783, down 503 from 7,286 a year ago. Still, the group added 23 advisors in the most recent quarter. "This is a bigger drop than some of the other wirehouses," said Elzweig. "But it seems like UBS is keeping the bigger producers."

UBS, he notes, is the only wirehouse broker-dealer that did not go through a major merger or acquisition in the past few years. As a result, its retention deal is not as hefty as what's on the table at some competing firms.