Wells Fargo Advisors recently moved to reverse its decision to raise the client asset level at which an account fee was waived.
The wirehouse told its roughly 13,500 employee advisors last month that — starting Sept. 1 — client households would need assets of $500,000 in their accounts to avoid fees that typically are as high as $300 per year; earlier, the asset level to avoid the charge was $250,000.
But in late March, the bank said it had suspended the move due to “the current environment and to ensure we are able to best serve our clients.
WFA also says it has other waivers in place, such as a $250,000 Advisory AUM Household Waiver and a $100,000 Net New Asset Household Waiver.
Wells Fargo’s advisor headcount stands at some 13,500 vs. nearly 14,000 a year ago. That’s down some 1,575 (or nearly 10.5%) from Sept. 30, 2016, when the firm had close to 15,085 registered reps and began making headlines for its fake accounts.
WFA is part of the bank’s Wealth & Investment Management unit, which is set to get a new chief as part of a restructuring effort announced earlier this year.
Jon Weiss is leading the unit in the interim, as he becomes CEO of Corporate & Investment Banking, previously part of the bank’s Wholesale Banking unit. In addition to WFA, the unit includes the Private Bank, Abbot Downing and Wells Fargo Asset Management.
Bank’s $3B Settlement
In February, Wells Fargo reached a $3 billion deal with the Department of Justice and Securities and Exchange Commision to resolve potential criminal and civil charges tied to its fake-accounts scandals.
As part of the agreements, the bank admitted that it collected millions of dollars in fees and interest to which it was not entitled, harmed credit ratings of clients and unlawfully misused sensitive personal information, including clients’ means of identification, the DOJ said in a statement.
The practices date from 2002 to 2016, when Wells Fargo pressured “employees to meet unrealistic sales goals that led thousands of employees to provide millions of accounts or products to customers under false pretenses or without consent, often by creating false records or misusing customers’ identities,” the DOJ added.
The criminal investigation of Wells Fargo’s records and identity theft is being resolved via a deferred-prosecution agreement in which the bank will not be prosecuted during the three-year term of the agreement “if it abides by certain conditions, including continuing to cooperate with further government investigations,” according to the DOJ.
“This settlement holds Wells Fargo accountable for tolerating fraudulent conduct that is remarkable both for its duration and scope, and for its blatant disregard of customers’ private information,” said Deputy Assistant Attorney General Michael D. Granston of the DOJ’s Civil Division, in a statement.
For its part, Wells Fargo CEO Charlie Scharf remarked: “The conduct at the core of today’s settlements — and the past culture that gave rise to it — are reprehensible and wholly inconsistent with the values on which Wells Fargo was built.”
“While today’s announcement is a significant step in bringing this chapter to a close, there’s still more work we must do to rebuild the trust we lost. We are committing all necessary resources to ensure that nothing like this happens again, while also driving Wells Fargo forward,” Scharf added.
In the fourth quarter of 2019, the bank had profits of $2.87 billion vs. $6.06 billion in the year-ago period; it set aside $1.5 billion in the Q4’19 for legal expenses. Revenues were $19.86 billion.
Public Citizen, a consumer watchdog group, criticized the settlement, saying in a statement: “Any resolution for Wells Fargo’s massive, management-directed misconduct must hold individuals to account. … Wells Fargo’s fake account scandal is as clear and understandable as pick-pocketing.”
“Criminal violations should be deterred through criminal enforcement actions, not deferred prosecution agreements where managers agree to institutional financial penalties and hollow promises,” the group added. “Protecting Wells Fargo from the consequences of its wrongdoing is not the DOJ’s job.”
Out of the $3 billion, the bank will pay $500 million to the SEC for misleading investors about the success of its “cross-selling” strategy from 2012 to 2016. The SEC will distribute the proceeds of the $500 million settlement to harmed investors and is continuing its investigation of the matter.
Janet Levaux is editor-in-chief of Investment Advisor. She can be reached at firstname.lastname@example.org.