Wells Fargo Suffers Despite Great Results From Its Advisory Unit Hot

Wells Fargo's wealth management unit -- which includes the old Wachovia brokerage operation as well as retirement services -- squeezed 72% more profit out of slightly higher revenue in the first quarter.

Just about all the needles pointed the right direction. AUM edged up 5% to a cool $1.2 trillion and revenue on those accounts climbed faster at an annualized rate of 8%. 

That indicates that Wells Fargo's advisors are getting smarter about generating higher ROA on every dollar they manage. 

For example, the amount of money in fee-bearing managed accounts surged 21% over the course of the year and now accounts for 21% of overall AUM, compared to 18% of all client assets in early 2010.

So the push to convert commission-based clients into fee-based clients seems to be working here.

And since the bank added only 0.3% to its non-bank advisory force -- and shed 10% of its bank advisors -- the advisors left at Wells Fargo are on average stronger producers with bigger books than they were a year ago.

All in all, the typical Wells Fargo advisor generated $669,000 on $62.5 million, for an average ROA of 1.07%. 

But despite all that progress, lack of growth for the bank proper -- which still accounts for 85% of the business -- spooked investors. 

The lending environment is still stagnant, and Wells Fargo climbed to the head of the industry as a lender first and foremost. 

Coming so soon after Bank of America's disappointing results despite Merrill Lynch's record quarter, this might be a trend of booming brokerage firms trapped in sagging banks.

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