Wells Fargo Counters Its Rivals By Raising Recruitment Bonus

In order to lure new advisers, Wells Fargo & Company (NYSE:WFC) has planned to give higher recruitment bonuses to financial advisers.

Per the sources, the bank is planning to give three times the annual revenues generated by the brokers as bonus, up from 2.5 times previously offered by most brokerage firms. The bonus has been designed in the form of a loan, which will be considered settled if the broker reaches the stipulated target and continues to work with the bank.

The advisors will receive bonus at the time of joining the bank and will get higher deferred compensation, which they are entitled to receive after some years of working in the bank. The Wall Street Journal was the first to report the news of increase in bonuses.

Another reason that led to the hike was the increasing rate at which the brokers were leaving the bank’s brokerage arm following the revelation of fake accounts scandal in Sep 2016.

On the contrary, Merrill Lynch, wealth management division of Bank of America Corporation (NYSE:BAC) , UBS Group AG (NYSE:UBS) and Morgan Stanley (NYSE:MS) are working out to reduce the amount of money spent on recruiting. Instead, they plan to use the money saved to encourage the brokers currently working for them by providing incentives to motivate them to perform better.

This move can be considered as bank’s initiative to improve performance and gain investors confidence. Although, the bank’s efforts to alleviate the impact of the scandal are encouraging, its financials continue to remain under pressure.

Wells Fargo’s shares have gained 3.0% in the last one year, significantly underperforming the 25.4% growth for Zacks categorized Banks - Major Regional industry.

Currently, the bank carries Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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