Wells Fargo & Co. plans a hiring spree in its investment products program, a move that would swell the unit's ranks by 20%.
Over the next 12 to 18 months, the San Francisco banking company will hire up to 400 bankers, brokers, trust officers, and portfolio managers for its private-client services group, said Dennis J. Mooradian, president of the operation.
The additions would boost the investment unit's ranks to 2,400 professionals. The expanded group, which also has 2,000 employees in sales, support, processing, and administrative posts, would make up 4.3% of the bank's work force.
Mr. Mooradian said the hirings are needed to capture assets from as many as 200,000 existing customers who qualify for wealth management services because their net worth has grown, thanks to the bull market, management buyouts, and mergers. The group currently serves 1 million customers, an unspecified portion of whom fall into the high-net-worth category, with annual income of at least $250,000 and investable assets of at least $1 million.
Wells' plan shows the dramatic steps some banking companies are taking to capture assets from wealthy people, said Diana P. Yates, a banking analyst at A.G. Edwards & Sons in St. Louis. "This is a significant strengthening of their efforts," she said. "It should make Wells Fargo more competitive in terms of having the right products and personnel to serve a growing market."
Wells will look outside the bank for talent and will hire investment personnel "from our competition," Mr. Mooradian said. That means looking to other banks, as well as brokerages and financial planning firms that do business within its market. "The way you grow is by having more talented individuals interacting with your clients," he said.
Wells has ambitious plans. The private-client services group accounts for 12% of Wells Fargo's earnings; the company wants to boost that figure to 25% over the next two years, according to analysts who have talked to Wells executives.
Banking companies are eager to serve high-net-worth customers, drawn by the potential for high profits and low credit risk, said Edward R. Najarian, a banking analyst at First Union Securities in Richmond, Va.
All told, Wells' private-client group oversees $120 billion of customer assets, including $52 billion for wealthy individuals.
The company's plan is to offer one-stop shopping to its high-net-worth customers, whether they want a jumbo mortgage or a tax-deferred annuity. Private client services combines trust, investment management, private banking, and brokerage into one business. Customers are typically assigned a relationship manager who acts as point person for the various products and services.
Wells Fargo's approach certainly has merit, said Natasha Haase, a senior analyst at Oliver Wyman & Co. "It's nice to offer convenience," Ms. Haase said. However, she added, "The challenge is to help the customer optimize their investment by getting the best value for them."
Mr. Mooradian said private client services recognizes the need to be competitive while trying to get the best returns for the customer. "The key is to make sure you hire the best people."
The unit is also going after older customers, who may be moving into the next stage of financial planning. "Just because clients' needs change, it doesn't mean they have to go somewhere else," Mr. Mooradian said.
That's where estate planning and charitable giving can help individuals manage their assets, he said.
Customers, he said, "should have the confidence that anything you need from a financial services standpoint you can receive at Wells."
The private client unit serves a key role in Wells Fargo's efforts to do more cross-selling. Because the unit offers so many services under one umbrella, relationship managers can key in on multiple products for each customer.
For instance, a customer who is receiving trust advice from the unit can easily be connected to brokerage or tax planning services, Mr. Mooradian said.
Having all the business lines available through one source counters the dilemma that many other banks face, Mr. Mooradian said. Typically, the trust department acts wholly independent of the brokerage or the investment management arm, and the chance to offer an expanded product line is lost.
