News emerged Friday that an attorney working with Wells Fargo had shared private information, including Social Security numbers, and compensation details tied to over 50,000 clients and advisors.
A former Wells Fargo advisor, whose brother is suing the bank, received 1.4 gigabytes of private data on July 8, according to The New York Times. The bank insists the leak of information was “inadvertent” and was caused by human error, not by a systemwide data breach.
While the bank is taking legal action to ensure the confidential information is not passed along, it finds itself — once again — in the spotlight, less than a year after it agreed to pay regulators some $185 million in fines tied to fake accounts.
“[Wells Fargo] must do some major damage control to figure out why and how this happened,” said Danny Sarch, head of Leitner Sarch Consultants, in an interview. “We are talking about the release of information that can damage people’s lives.”
While the Wells Fargo brand is “iconic,” it will likely be negatively affected by the story highlighting the data release that appeared The Times and other coverage nationwide, he says.
“The idea that an attachment of this size could be sent without someone checking on it first … is horrific — and astonishing,” Sarch said.
As for the 14,500 registered representatives working with wealth clients, the situation is yet another reason for them to be angry, he explains, after they spent the last year or so dealing with fallout from the fake-accounts scandal.
For advisors considering a possible move from another firm to Wells Fargo Advisors, “I do not see how the situation is better for them now that this news is out there. It certainly does not help them.”
As of June 30, Wells Fargo said its advisor headcount dropped 3% from a year ago, by about 436 advisors.
Will more advisors depart?
“I personally have gotten three calls from larger teams indicating this was their last straw, and this is only on the first morning after the news broke,” Sarch explained. “There are still some folks out there who are not yet aware of it.”
The brand, its wealth managers and recruiters now face a tough challenge.
“You think you have seen it all and that it will hard to be surprised [by more bad news], and this comes along,” the recruiter said.