Wells Fargo Raises Monthly Comp Hurdle for 2021

As usual, the firm looks at compensation and strike a balance the firm's "strategic priorities" with "major industry trends" and the investments it makes in its programs that are "all aligned around the client," he said.

'Refined Tweaking'

Commenting on Wells Fargo's 2021 comp plan Friday, Andy Tasnady, managing partner of Tasnady Associates, told ThinkAdvisor: "My read is it's just a lot of refined tweaking. It's not major at all. It's very surgical."

The "core adjustment" the firm made is the $1,000 increased hurdle, and that "haircut" won't be a significant issue for Wells Fargo's brokers, he said. For a $300,000 broker, "that's about a 1% change," but for a $900,000 broker, it's only about a 1/3 of 1% "payout change — so it's not that big of a ding for the average and larger-than-average" brokers, he said.

The firm is "shifting a little bit toward getting the message to be adding assets … and also focusing on the liability side — securities-based lending and mortgages, and they're doing that through their deferred comp" with the two new bonus opportunities, he added.

Wells Fargo said earlier this year that, because of the pandemic, it was holding off on a plan to raise the client asset level at which an account fee was waived. It had said that, starting Sept. 1 this year, client households would need assets of $500,000 in their accounts to avoid fees that typically are as high as $300 per year; earlier, the asset level to avoid the charge was $250,000.

The firm's 2020 compensation plan reduced payouts last year on client households with less than $250,000 in assets to 20%. Previously, that payout level applied to households under $100,000.

Rivals' Comp Changes

About one week before Wells Fargo's disclosure Thursday, Merrill Lynch disclosed it eliminated pay to advisors on all client household accounts under $250,000, but left its core incentive compensation grid intact for 2021, while making minor tweaks to its team grid program. Performance hurdles for its growth grid, meanwhile, will remain at the same levels introduced in mid-2020, Merrill said.

Rival Morgan Stanley hasn't announced its 2021 comp plan yet. It had said in March it was delaying an important change to its compensation plans until October. The change, involving a jump in the levels of yearly fees and commissions under $5 million used as thresholds in the incentive comp grid, had been set to start April 1. In May, UBS joined other wirehouses and pushed back the start of changes to grid payouts due to the pandemic.

— Related on ThinkAdvisor:

• Wells Fargo Facing 'Uphill Fight' Over Fed's Growth Cap
• Merrill Ends Advisor Payouts on Small Accounts
• UBS to Boost Fixed Pay, Cut Bonuses in Comp Revamp