Two months after news broke of gender-bias complaints at Wells Fargo’s wealth management business, the head of both that unit and private banking at the embattled bank is set to step down.
Jay Welker will retire at the end of March, Wells Fargo confirmed Wednesday, one day after the development was reported by the Wall Street Journal.
Welker has been private bank president and head of the wealth management division since 2003. He joined Wells Fargo in 1988, but left to work for U.S. Trust (bought by Bank of America in 2000) in 1997, according to his LinkedIn profile.
Dozens of women employed at Wells Fargo have been interviewed, and at least one human-resources complaint has been filed against Welker, the Journal reported in August; some women with the wealth unit said the retiring executive frequently referred to them as “girls” and told them to put on “big-girl panties.”
As for other issues, more details on how aggressive sales goals may have caused problems for clients in Wells Fargo’s wealth management unit were highlighted in a July Journal report.
Financial advisors encouraged investors to move funds into products in order to generate extra fees, more revenue and larger bonuses, the paper said, after speaking with some 25 former employees and reviewing bank documents.
Wells Fargo Private Bank clients, for instance, were urged to put their money into alternative-investment funds owned by the bank.
(Check out Investment Advisor magazine’s cover story, When Will Wells Fargo’s Scandals End?)
Latest Earnings, Headcount Woes
Wells Fargo’s wealth management unit — which accounts for 12% of the bank’s total net income — has a 2% year-over-year jump in profits in the third quarter to $732 billion. That was a big change from the prior quarter, when net income sank 37% from the prior year and the unit set $114 million aside for refunds to wealth management clients who were charged “incorrect fees.”
The number of financial advisors in the retail brokerage business, though, fell again. It stands at 14,074 — down 490 from a year ago and 152 from the second quarter.
Since Wells Fargo’s fake-accounts scandal began capturing headlines in September 2016, the number of advisors has declined by 1,012 — a drop of 7% from 15,086 two years ago.
The trend seems to be continuing into the fourth quarter. Steward Partners, for instance, recently said the former Wells Fargo team Coyle Financial Group joined it with some $500 million in client assets in Washington, D.C. (Steward is an independent practice affiliated with Raymond James.)
Total assets under management for Wells Fargo’s Wealth & Investment Management (WIM) unit stand at $1.9 trillion, a gain of 2% from a year earlier thanks to the strong financial markets. But this improvement was “partially offset by net outflows,” the bank said.
The retail-brokerage segment also grew assets by 2% year over year to $1.6 trillion, with advisory assets of $560 billion. As for WIM referrals to Wells Fargo’s community banking business, these assets were flat from a year ago and dropped 7% from Q2’18, though they are up 1% year to date.
— See a Timeline on Wells Fargo’s Scandals.