Like other large wealth managers, Wells Fargo is constantly contending with advisors looking to leave in search of greater independence. Unlike many of its competitors, though, the firm offers them an in-house destination: Wells Fargo Advisors Financial Network, or FiNet, its division for advisors operating as independent contractors.
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By making the transition to independent status easier, Wells Fargo may be sacrificing some of the higher profit margins that come with employing advisors directly. But the strategy also allows Wells to retain a large number of advisors who would probably otherwise go elsewhere.
John Tyers, FiNet president, said many advisors who join Wells Fargo’s employee divisions have an eye on ultimately going independent with FiNet.
Wells Fargo
“We continue to see strong interest in FiNet from both internal and external advisors looking to launch, grow, or expand independent practices,” he said.
FiNet may have helped Wells retain hundreds of advisors
In the past four years, just over 1,400 registered representatives have left Wells Fargo’s two direct-employee channels — Wells Fargo Advisors and Wells Fargo Clearing Services — to join FiNet, according to data from industry tracking firm AdvizorPro. Last year alone, 329 made that internal move.
Of course, the term “registered representative” is not synonymous with “advisor.” Many professionals registered with the Financial Industry Regulatory Authority perform back-office functions unrelated to managing assets or working with clients. AdvizorPro’s figures include some of that support staff, in addition to advisors.
Still, in a year when industry recruiters counted more than 11,000 experienced advisors switching firms, Wells Fargo’s ability to retain more than 300 registered reps in-house in 2025 should give its competitors something to ponder. Phil Waxelbaum, the founder of the recruiting firm Masada Consulting, said FiNet’s advantage is that it removes much of the risk involved in an advisor’s decision to go independent.
Often, when advisors leave employee roles to join an independent broker-dealer or similar firm, they also leave behind 10% to 20% of their books of business, Waxelbaum said. Some find their clients don’t want to move with them. Others end up contending for their book with their former firm.
Neither scenario occurs when a Wells Fargo employee advisor moves to FiNet, Waxelbaum said.
“Nobody’s going to compete for your book,” he said. “Nobody’s going to call your clients. You don’t have to change account numbers. You don’t have to do 4,000 reams of paperwork. Your clients will hardly even know what happened. You’ll explain it to them in whatever way you choose to, but you don’t have to sell a new firm.”
What Wells Fargo gets from having FiNet
The benefits to Wells Fargo are less straightforward. By making it easier for advisors to take on independent status, the firm may be sacrificing net income.
Firms typically retain a fairly high percentage of the profits generated by employee advisors and then use part of those proceeds to pay for expenses such as office space, staff, health insurance and other benefits. Independent contractors, by contrast, keep a greater proportion of what they generate but assume a much larger share of their business expenses.
Ron Edde, the president and CEO of the recruiting firm Millennium Career Advisors, said those cost shifts help make a move to an independent channel like Wells Fargo’s FiNet less painful than many think.
“Those advisors that move are picking up a lot of expenses that you know the firm previously covered,” Edde said. “I’m referring to things like health insurance, unemployment insurance, software-licensing fees, rent, secretarial and administrative assistant help. Those aren’t inconsequential costs.”
Firms that offer advisors an in-house independent option generally face pressure on profit margins. That may help explain why few others have set up a division in the same vein as Wells Fargo’s FiNet, Waxelbaum said.
If advisors are going independent, why not keep them in-house?
For Wells, the value of its independent channel most likely comes in the answer to a simple question: How many advisors would have left to join industry rivals had the FiNet option not existed?
Researchers who study the wealth management industry have long noted the strong allure independence holds for many advisors. In an “Advisors in Transition” report last year, the consultant Cerulli Associates and investment manager 55ip found that 10% of advisors were expecting to either merge their firms with a larger partner or move it elsewhere, usually by going independent. As a result, the report predicted advisor headcounts at registered investment advisors would increase by nearly 12% by 2028 and at independent broker-dealers by nearly 5%.
Headcounts at wirehouses like Wells Fargo were meanwhile expected to fall by nearly 6%, Cerulli and 55ip predicted from interviews with more than 20 wealth managers with at least $100 million in client assets.
Waxelbaum said Wells Fargo has wisely recognized, “This will be an ongoing battle, year after year, decade after decade.”
Rather than fight the trend, Wells Fargo executives have essentially said, “Let’s just take down the fences and let people have a happy affiliation with Wells Fargo, wherever they may roam,” as Waxelbaum put it.
So why aren’t more firms following Wells’ example? Aside from profit considerations, it’s likely because FiNet was the result of a happy confluence of events rather than a deliberate attempt to build an independent channel from the ground up.
FiNet owes its existence to Wells Fargo’s purchase in 2008 of the financial services firm Wachovia, which had gained a channel for independent advisors through previous acquisitions. Without making similar deals, wirehouse stalwarts like Morgan Stanley and Merrill would be hard-pressed to develop something similar.
Waxelbaum said the better comparisons to Wells are large regional firms like Raymond James and Ameriprise that have long had channels for both independent and employee advisors. Although both firms have stopped regularly reporting their advisor headcounts, other figures indicate the majority of their advisors operate as independent contractors. (Wells Fargo, which has roughly 12,000 advisors, also doesn’t report an advisor headcount for its independent division.)
Wells makes it easy to go indie
Waxelbaum said Wells Fargo is notable for making it extremely easy for advisors to leave behind their employee status and become independent contractors. The main barrier is often the recruiting loans many take when coming to Wells Fargo’s employee division from a rival firms. Those loans are typically “forgiven” if recruited advisors stay put for a set number of years but must be paid back if they leave early.
Edde said advisors who go independent but stay at the same firm — say by moving from one of Wells’ employee channels to FiNet — forgo any such transition check they could easily receive from an industry rival. For many, the question is: Is the hassle of changing firms worth the money they’d receive from a recruitment deal?
“That fear of change is what keeps a lot of advisors in their seats right now,” Edde said. “Let’s face it: The money being thrown on advisors to change T-shirts and play for a different team is massive. And yet, not 100% of advisors are doing it because they fear one of my clients won’t follow me.”
Brian Mora, the head of experienced advisor recruiting at Ameriprise Financial, said there are other reasons firms may not necessarily want to eliminate all barriers to advisors moving between employee and independent channels.
“I would say that the transition assistance factors in a little bit,” Mora said. “But there are other factors when you, when you move someone into our [employee] branch platform around the amount of real estate we commit to, the amount of operations staff we commit to.”
Mora said so much attention is paid to employee advisors going independent that movement in the opposite direction is perhaps given short shrift.
“There are many instances where someone who has been independent for 10, 15, 20 years and realizes, ‘My life would be better or simpler if I didn’t have to run the business part anymore, with rents or leases and staff and benefits,'” Mora said. “And they ask us questions about coming back into our employee platform.”
Will more firms follow Wells Fargo’s example?
Many large independent broker-dealers like LPL Financial, Osaic and Cetera Financial Group have recognized the appeal of direct employment and set up divisions for advisors who don’t want to operate as independent contractors. Employee status can be particularly beneficial to advisors who are nearing the end of their careers and looking to hand their business down to successors. Independent broker-dealers with employee divisions can buy the businesses of older advisors and then keep them on the payroll for a number of years until they’re ready to retire.
Meanwhile, some firms have found that maintaining channels for both direct employees and independent contractors is not for them. Most notably, Stifel sold its independent advisors unit to the financial services firm Equitable earlier this year.
But for firms that do choose to maintain both employee and independent channels, Waxelbaum thinks Wells Fargo is setting the example to follow.
“I think that the thing that the industry has to give notice to is that the Wells Fargo C-suite is uniquely untethered by the past,” he said. “If you look at firms that are unwilling to have multi-channels or those firms that have multi-channels but are unwilling to allow safe passage from one to the other, they’re living in an era that is rapidly disintegrating.”
