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Wells Fargo Asset Management will rebrand to Allspring Global Investments and has appointed its third chief executive in less than three years in a push to revive the business.
GTCR and Reverence Capital, the private equity firms that bought WFAM in February for $2.1bn, hired one of the investment industry’s most experienced executives to signal the start of a new era for the $604bn asset management arm of the troubled bank. San Francisco-based Wells Fargo was at the centre of a mis-selling scandal in 2016, which resulted in large fines and a change of leadership.
Joe Sullivan, the former head of Legg Mason — which was bought by rival US asset manager Franklin Templeton for $6.5bn in 2020 — has been named the chief executive and chair of Allspring, which struggled to attract new investor business in recent years under its previous owner. He will replace Nico Marais, WFAM’s chief executive since June 2019, who will remain as a senior adviser.
WFAM registered net investor inflows of just $35.9bn over three years ending in December 2020 with all of the new business coming from money market funds, which account for just under a third of its total assets. Rivals BlackRock and Vanguard attracted net inflows of $944bn and $682bn, respectively, over the same period. The rest of WFAM’s strategies registered net outflows in each of the past five years.
“The new ownership is a natural catalyst for change. The company is operating well and is already a large-scale business. That provides a solid foundation for innovation, transformation and growth,” said Sullivan.
The name change will come into effect once the sale process is completed later this year.
“Rebranding is vital as is a new broom at the top to reboot the ailing WFAM business,” said Amin Rajan, chief executive of Create Research, an asset management consultancy.
GTCR and Reverence Capital intend to invest about $100m to strengthen WFAM’s distribution and technology capabilities.
Sullivan said he was “not satisfied” with WFAM’s current market share but a headwind to growth had been removed with the change of ownership as distribution platforms serving financial advisers and wealth managers have long viewed Wells Fargo bank as a rival.
Efforts by WFAM to attract new clients have also been hampered by the 2016 mis-selling scandal involving the fraudulent opening of millions of customer accounts, which Wells Fargo bank has struggled to recover from.
WFAM’s existing portfolio management groups will be retained at Allspring and new teams or boutiques might be added over time in order to expand into private markets and exchange traded funds.
“Some bolt-on acquisitions may be necessary to beef up the existing capabilities. Improvements are needed to create a distinctive competitive edge at the time when large-scale players, such as BlackRock and Vanguard, are dominating the industry’s inflows,” said Rajan.
WFAM has 24 offices globally and its new owners want to expand its international operations, particularly in Asia where assets under management are growing at a faster pace than the rest of the world.
“We want to become more balanced between our US business and our international operations. It will require patience and persistence to build the Allspring brand in international markets,” said Sullivan.