June 10, 2014 / 2:00 PM / 4 years ago

Some Wells Fargo brokers balk at signing new team agreements

NEW YORK, June 10 (Reuters) - Wells Fargo Advisors has asked its brokerage teams to formalize their pay and account arrangements in a way it says is generous, but which some brokers fear could lead to a client grab when teams change or dissolve.

When the broker-dealer unit of Wells Fargo & Co. outlined the plan several months ago - its first effort to give benefits to teams rather than individual advisers - brokers and firm executives said it would make working on teams more compelling.

For the first time, Wells said advisers could share deferred bonus awards, devise inter-team revenue splits and transfer revenue-target goals and recognition club trips among themselves.

Brokers who sign the deal could also get some bonuses they would not qualify for individually if the team reaches a cumulative target - such as for selling bank loans or bringing in new accounts, rather than requiring each broker to meet his or her individual sales target.

Still, after studying the agreement, some brokers are having second thoughts and have yet to sign the pact.

Team-based brokers who fail to sign by the end of June will continue to operate as in the past - organizing team responsibilities as they like but receiving compensation and benefits based on individual achievement.

Securities firms like Wells Advisors have been encouraging brokers to work on teams to increase contact options for clients, to enhance selling of specialized services and products and to make it more difficult for individuals to jump to another firm.

Some team-based brokers fear the new agreement could cost them clients. It allows Wells to dissolve the team at its discretion if it determines the action is in the best interest of the clients, the team members or the firm.

More importantly, they say, it allows Wells to override the teams’ own arrangements for reassigning accounts when a broker leaves or dies, and to assign that person’s accounts to brokers outside the team.

“What bothers us most is Wells’s ability to take and to disperse the accounts as it sees fit,” said the head of one team that has been together for more than a decade, and who did not want to be quoted by name. “If they don’t like what we decided, they can take over.”

Anthony Matera, a Wells spokesman, said the new plan gives team members “amazing flexibility” in structuring compensation and clarity about what happens if teams dissolve.

“You’d have to read a lot into this agreement to find something to complain about,” he said. “It’s intended to be beneficial to the financial advisers.”

The reason for the focus on team breakups - some brokers have called the new agreement a “pre-nup” - is that “we want to spot the problems before they become issues,” Matera said. He said Wells had invited dissenting brokers to suggest customized revisions for their practices.

Wells recently extended the deadline for returning forms from May 31 to June 30, citing “additional demand” from brokers who needed time to calculate their team formulas.

Some advisers and consultants said Wells’ primary concern was to shield itself from lawsuits or arbitration hearings that occur when dysfunctional teams break up, and noted that other firms also have team agreements.

“I‘m guessing that a big firm like Wells has had all types of issues, and this is an attempt to tighten up how brokers get married, get divorced or split up the estate,” said Danny Sarch, a broker recruiter based in White Plains, New York. “It was probably dealt with in an ad hoc way before.”

The new team benefits will be made available to the more than 11,000 brokers within the private client group of Wells Fargo Advisors.

Wells would not comment on how many advisers work on teams or how many teams had returned signed agreements. (Editing by Linda Stern and Bernadette Baum)

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