July 1, 2021
Wells Fargo & Co., one of the nation’s largest mortgage lenders, is sweetening brokers in the bank’s asset management department who sell their mortgage clients.
Wells Fargo Advisors has raised mortgage payments for its major private client brokers from 40% to a lump sum of 70 basis points, up from 50 basis points, the spokeswoman confirmed. The change was implemented in April but garnered attention as some brokers said they saw a few thousand extra dollars in some of their recent salaries.
A Wells spokeswoman declined to comment on the reasons for the increase, which came amid a surge in housing demand that triggered the largest spike in home prices in three decades in April, according to the agency. Bloomberg report…
Bank-owned firms are encouraging brokers to lend more to clients to increase asset returns and trade with more stable interest income. The income that the bank generates is also considered “non-compensable”, which means that it is not shared among brokers like other commissions and commissions they charge clients.
“This is another step in the trend towards increased focus on increasing the credit side of the balance sheet for clients,” said compensation consultant Andy Tasnadi. “As the income of asset management firms rises, firms that have banking are trying to increase their growth through lending.”
Wells, in particular, sought return to resentment, including by increasing coordination and cross-selling across its divisions as it goes beyond the distractions and “side effects” of the 2016 fake account scandal, CEO Charlie Scharf said at an industry conference in June.
“We are looking at leveraging different parts of the franchise to better serve our customers,” Scharf said at the conference. “It’s not just a matter of increasing efficiency. This is one really good platform for all of our clients. “
The rate hikes make Wells payments more competitive than their competitors, although each firm has different payment methods for its mortgage business, which compensation consultants say makes it difficult to make accurate comparisons.
At Merrill Lynch Bank of America, for example, brokers are paid based on the total amount of loans issued during the year. A company spokesman confirmed that brokers who make loans of less than $ 3 million receive a payout of 25 basis points, while they can earn 75 basis points if the amount exceeds $ 3 million.
UBS Wealth Management USA also operates on a sliding scale, with brokers earning 50 basis points on the first three mortgages they generate and 75 basis points on each additional mortgage, according to a broker at the firm.
Broker UBS, however, believed that the count was based on production numbers, so teams that sell mortgages to customers with shared production numbers, as well as their own customers, might have to sell more before they hit the minimum.
A UBS spokesman declined to comment or confirm the broker’s number or approval.
Brokers usually only take home a fraction of those 50-75 basis points, depending on their “network” rate. At Wells, brokers receive 22% of the income they generate until they hit the monthly barrier in excess of 50%.