Rumors persist that Wells Fargo & Co. is in discussions with UBS AG about acquiring its retail-wealth-management operations in the U.S., according to Andrew Osterland’s InvestmentNews article, “Wells Fargo and UBS at the table again?” The rumors seem to be supported by Wells Fargo CEO John Stumpf, who was quoted as saying: “In the wealth and retirement business we are suboptimized. If we could jump a curve with the right deal, that’s great.”
Wells Fargo employs about 15,000 advisers, largely through acquisitions Wachovia Corp., A.G. Edwards & Sons Inc., Prudential Financial Inc. and First Union Corp. UBS Wealth Management Americas employs 6,800 advisers. Wells Fargo would surpass Bank of America Merrill Lynch and Morgan Stanley Smith Barney LLC in the number of advisors if the rumors prove true.
But it might be one too many acquisitions. “As we speak, Wells and Wachovia are still trying to integrate into one firm,” Mindy Diamond, president of Diamond Consultants, was quoted as saying.
“They would have more than 22,000 advisers and they’ll cannibalize their own business,” executive recruiter Mark Elzweig was quoted as saying, adding: “There would be six guys working at the country club for the same firm.”
Still, being in the same league as Morgan Stanley and Merrill Lynch may provide strategic advantages, especially if the acquired advisors do not need added monetary inducements to stay on. Most of UBS’ advisors are already “locked up” by recruiting or retention contracts, according to the article.
An acquisition may not sit well with UBS advisers. “We want to maintain a boutique standard and go after the big dollar,” one UBS adviser, who asked not to be identified, was quoted as saying. “Wells Fargo is still trying to figure out its own culture.”
According to UBS spokesperson Karina Byrne: “[UBS CEO Oswald Grubel] has always maintained that the Wealth Management Americas business is not for sale.”
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