Wells Fargo Insists Fed’s Growth Ban Won’t Impact its Wealth Management Accounts
Wells Fargo claims that the recent growth ban on the bank announced by outgoing Federal Reserve Board chair Janet Yellen does not affect accounts in its brokerage business, ThinkAdvisor writes.
But that doesn’t necessarily mean clients will want to come over to Wells Fargo’s wealth management unit, according to the publication. While Wells Fargo’s attempts to change following its recent troubles with regulators “are sincere,” the company’s recent history suggests “they are showing that they do not care to put the client first — from mortgages to car loans to bank loans,” recruiter Danny Sarch of consulting firm Leitner Sarch tells ThinkAdvisor.
So while regulators haven’t found any rule-breaking on the part of Wells Fargo Advisors, the company’s wealth management unit, it’s nonetheless more difficult than ever for advisors considering joining the brokerage to convince their clients to come along with them, Sarch tells the publication. Meanwhile, advisors already with Wells Fargo have to contend with “headline risk” when attempting to bring on more assets from existing clients and prospects, he says, according to ThinkAdvisor.
And it’s not the growth cap put on Wells Fargo that will impact the company’s wealth management unit, bank analyst Richard Bove of Vertical Group tells the publication. Rather, it’s the fact that competition from cheap ETFs will force wealth units overall to get into making loans and selling mortgages, he says, according to ThinkAdvisor.
Following the bogus account scandal that hit Wells Fargo’s banking unit in the fall of 2016, its wealth management unit shed advisors for all consecutive months except for the third quarter last year, ending 2017 with 14,544 reps, a 2% drop from the year prior.
Unlike rivals Morgan Stanley and UBS, who are trying to hold on to their advisors by withdrawing from the Protocol for Broker Recruiting, Wells Fargo Advisors is discussing ways to make it cheaper for its employee advisors to switch to its independent channel, Wells Fargo Advisors Financial Network, or FiNet.