Financial Advisors Encouraged to Offer Mortgages to Customers

Dow Jones is reporting that financial advisers are being encouraged to work with bankers on getting mortgages and other loans from their clients.

According to the article, Wells Fargo has seen loan originations by advisers increase by 33% this year and originations by advisers who are based outside the bank branches are up 17% year to date, “a great example of how our businesses work together to generate revenue,” Chief Executive John Stumpf said at a conference recently.

Wells Fargo, prior to acquiring Wachovia, was doing about 75% of its business in consumer banking and 25% in commercial banking and wealth management. “One of the real values of this merger is that it really balanced the company,” Stumpf said. “We’re more now 50% consumer and 50% wealth and commercial.”


The greater banking support for Wells Fargo Advisors and increased wealth management support for the bankers has driven up loan originations. The company now is also testing a program that will partner financial advisers with their counterparts in Wells Fargo bank branches. This could increase lending business even more.

At the conference, Stumpf also said the average number of Wells Fargo products its customers have was 9.76 at the end of the third quarter, up from 9.37 at the time of the merger. That is “demonstrating the success we are having at growing deposits, loans and managed assets,” he said.

Bank of America Merrill Lynch says its mortgage applications among advisers are 44% higher in 2010 compared with last year. New securities-based loans increased 62% year over year, and net balances outstanding have grown 30%, the company said.

Financial Advisers Slip Into Loan Business

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  • >>Bank of America Merrill Lynch says its mortgage applications among advisers are 44% higher in 2010

    This must be from the Forward side. I couldn’t interact with the Financial Advisors at Merrill Lynch when I was employed as a RMLO last year.

  • I believe that WF pays its financial advisers for mortgage loan referals because they are within the same company. They definitely do that if the deal comes from a bank branch employee. If that is the case, how does that fundamentally differ from paying someone that is not within the same company? If the purpose of this RESPA rule is to keep a lid on costs to consumers, is there a difference? Is this just another example of big banks receiving favorable treatment over small business owners? Just a thought.

    • Lance,

      Your point is well taken. It also brings up the question of compensation flowing from the other departments and affiliates to those originating due to referrals — a direct violation of the firewall principle required by HUD and HERA.

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