Wells Fargo Advisors

Wells Fargo Advisors is the second largest firm of stock brokers in the United States, after Bank of America Merrill Lynch. It used to be known as Wachovia Securities until Wachovia was taken over by Wells Fargo as a result of the financial crisis of 2008.

Wells Fargo is one of the big four American retail banks along with Bank of America, Citigroup and JPMorgan Chase. It is a diversified financial company that has operations throughout the world. It is the fourth largest American bank by assets, and the third largest by market capitalization and the second biggest for mortgages, debit cards and deposits. Other wealth management companies under the Wells Fargo umbrella are Wells Fargo Investors, LLC and Calibre which is aimed at the very wealthy. It also has an active wholesale banking division.

Wells Fargo is set up as an integrated financial offering that aims to have 100% of their client’s financial business. Wells Fargo is a leader in this cross selling, with one of the highest numbers of products per customer for an American financial institution, the so-called “cross sell rate”. This is one of the reasons why Wells Fargo were so keen to buy Wachovia as the large retail investor base could be cross sold other Wells Fargo products in time.

Wells Fargo was set up in 1852 by Henry Wells and William Fargo, who also founded American Express, to provide banking and courier services to the newly emerging state of California when the other directors of what was to become American Express objected to extending operations to California. The courier services were nationalized by the American government during the First World War, which meant that Well Fargo was free to concentrate on commercial banking. Wells Fargo merged with a number of banking operations in the west of America including the National Bank of Nevada, the Union Trust Company, the American Trust Company, the Crocker National Bank and Barclays Bank of California.

Wells Fargo was itself bought in 1998 by the Norwest Corporation which took on the Wells Fargo name and moved its headquarters to San Francisco to take advantage of Wells Fargo’s reputation. A number of other acquisitions occurred and in 2008 Wells Fargo as a reasonably secure bank was asked to take over Wachovia, including Wachovia Securities which were renamed Wells Fargo Advisors.

Wachovia itself is still based in Charlotte, North Carolina, although all the operations are gradually being renamed with the Wells Fargo brand. Wachovia was always a southern based bank that grew from its relationship with tobacco farmers, including the tobacco giant R J Reynolds. It was later bought by the First Union bank of North Carolina, but as an important part of the deal First Union was to take on the Wachovia brand and identity.

Wachovia grew particularly in the retail brokerage business because it had bought a number of large retail brokerages including Prudential Securities, Metropolitan West Securities, South Trust and Golden West. However it was the purchase of A G Edwards, then the second largest retail brokerage firm in the United States, that bought it such a big part of the investment market. A G Edwards had a focus on the “mass affluent” before the term was coined, with an extensive branch network and products that obsessively focused on the needs of local businessmen and professionals and not on the very richest in society that the other brokerages tended to service.

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