Bank employees at Wells Fargo have steered $1 billion toward the company’s wealth management unit in the third quarter through cross-selling, Reuters reports.
The bank is facing fallout over revelations that thousands of its employees opened more than two million fake deposit and credit accounts without customers’ knowledge, which has resulted in $190 million in fines and calls from lawmakers for further investigation. That scandal has spread to Wells Fargo Advisors as well, with former employees and customers complaining about similar tactics at the brokerage, as reported previously.
The amount of “referred investment assets,” as the bank calls referrals from bank employees to the wealth management division, is “in line with other trends,” the bank claims, according to the newswire. But the company has changed the way it reports cross-selling, Reuters writes. Previously, the strategy was reported by showing the average number of products held by wealth management client households who also held checking or savings accounts with the bank, according to the newswire. The last time the figure was reported, in August 2015, the average Wells Fargo wealth management client household had 10.52 accounts, which was the highest among all of Wells Fargo’s divisions, Reuters writes. Wells Fargo’s wealth unit posted a $677 million profit in the third quarter — a 16% rise over the previous quarter, according to the newswire.
But Wells Fargo Chief Executive Timothy Sloan, who took over after John Stumpf retired last week, said the company will be watching “very closely” the cross-selling between its banking and wealth management units, the Wall Street Journal writes.
Cross-selling, used widely by banks and brokerages alike, has been under lawmakers’ scrutiny following the Wells Fargo account scandal, the newswire writes. Earlier this month, Massachusetts regulators went after Morgan Stanley for alleged “unethical” sales tactics by its brokers, as reported previously.
Wells Fargo rival JPMorgan, meanwhile, said it’s doing a “deep dive” into how its employees cross-sell products, Bloomberg reports.
In a conference call with journalists, CFO Marianne Lake said the company already found lapses, but the problem wasn’t systemic, the news service writes.