Wells Fargo Developments
Wells Fargo Advisors has raised the asset level at which it waives an account
fee. As of Sept. 1, households will need
$500,000 of assets in their accounts to
avoid fees that typically are as high as
$300 per year. In the past, the level to
avoid the charge was $250,000.
“The fee amounts per account will
remain the same, however, the threshold
amount for clients who receive an automatic waiver has shifted from $250,000
in household AUM, to $500k household
AUM. This will impact a small number
of clients,” the bank said in a statement.
(The asset levels will be reviewed on
June 30 and then charged to accounts in
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.
“The market and Household AUM
have increased significantly since the
$250,000 AUM Household Waiver was
established,” it added. (With the market
now down over 20% from its highs this
year, client AUM levels are likely down
from where they stood at Dec. 30, 2019.)
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
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-prosecu-tion 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 infor-
mation,” 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 repre-
hensible and wholly inconsistent with the
values on which Wells Fargo was built.”
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
“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.