Following a report Friday in The Wall Street Journal, a Wells Fargo executive insists that a legal team hired by its board — and not the FBI — has been asking wealth-unit employees questions about some of its practices. Nonetheless, at least one industry recruiter says the publicity is causing more advisors to seriously consider leaving the firm.
“More and more [advisors] have called me” about switching firms, said Danny Sarch of Leitner Sarch Consultants, in an interview. At the start of the month, when Wells Fargo revealed its own review of certain wealth management irregularities, Sarch received three calls.
On Friday, the Journal reported that the FBI had interviewed some wealth-unit employees in Phoenix, prompting the unit to “review the matter internally and discuss it with Shearman & Sterling, which is acting as counsel to our board of directors,” explained Jonathan Weiss, a senior vice president in Wealth and Investment Management, in a memo shared with ThinkAdvisor (following an initial report in InvestmentNews).
“As a result of that review and discussion, we are confident none of our team members in Wealth and Investment Management was interviewed by the FBI, as described by The Wall Street Journal. We have learned some interviews did occur recently in Phoenix, but these were conducted solely by Shearman & Sterling as part of its independent review,” Weiss said.
The executive acknowledged that the wealth unit is now in the spotlight more than ever, following 18 months of attention on fraudulent accounts and other issues at its retail bank.
“We all appreciate how difficult it is to take questions from clients and team members in this environment of heightened media scrutiny,” he stated. “Let’s remain calm, stay in front of our clients, and continue to excel at the important business of protecting and growing their hard-earned savings and helping them achieve their financial goals.”
The Justice Department and Securities and Exchange Commission are looking into some overcharges and incorrect wealth management fees, as well as possibly “inappropriate” referrals and recommendations affecting 401(k) rollovers, the Journal reported earlier this month. Employees have pointed to issues with the bank’s own investment products, according to the paper.
“It’s a big deal. Clients are commenting on this to advisors … since it’s the first time the [problems] have happened in wealth management,” Sarch said.