Wells Fargo's advisory business enjoys record profits, despite revenue jumping by a mere 2%, thanks to cost cutting that led to doing more with less.
Wells Fargo's wealth, brokerage and retirement business is doing more with less.
The division posted record net income of $434 million in the second quarter, up 29% from the first quarter on just a 2% increase in revenues.
Like the rest of the bank — which also reported record quarterly income —the surge in profitability was keyed more by controlling expenses than hiking sales. Revenues in the wealth management division were fairly flat at $3.26 billion, but non-interest expense was down 4%. The company attributed the lower costs to “seasonally higher 1Q13 personnel expenses and lower deferred compensation expense” in the second quarter.
Wells Fargo ended the quarter with 15,268 financial advisers in its employee and independent adviser channels, 86 fewer than it started the quarter with. It had 15,170 advisers at the end of the second quarter in 2012.
The top line growth looked more impressive relative to last year — up 10% from the second quarter in 2012. In its earnings release, Wells said the revenue gain was driven by higher asset-based fees and increased revenue from brokerage transactions.
Total client assets in the retail brokerage and wealth management business were up 8% from the prior year's second quarter, but down 1% from the first quarter. The bank's managed account platform was a bright spot in the results, with managed account assets up 19% from the second quarter in 2012 and 2% from the prior quarter.
Individual IRA assets of $315 billion were flat during the quarter, but up 12% from the previous year, while institutional retirement plan assets were up 11% from 2012 and down 1% from the first quarter.
