By George C. Miller, Esq. of Shustak Reynolds & Partners, P.C. posted on Friday, August 24, 2018.

George C. Miller

Partner

Location: San Diego, California
Phone: (619) 696-9500 (Ext. 105)
Direct: (619) 501-8270
Email: [email protected]

Wells Fargo’s wealth management unit continues to lose advisors to competitors following reports of a joint probe into the firm’s sales practices by the Justice Department and Securities and Exchange Commission. Wells Fargo has seen a recent wave of deflections from its wealth management unit to competitors.  Since June of this year, Wells Fargo has lost advisors overseeing more than $2.5 billion in assets under management to Raymond James. Most recently, a $161 million team left Wells Fargo to join an Ameriprise office in Temecula, California.  The firm has lost a slew of other top advisors to Stifel. 

This most recent investigation into Wells Fargo’s sales practices traces to September 2017, when four Wells Fargo advisors based in the firm’s Phoenix, Arizona complex sent a letter to the DOJ and SEC outlining what they considered to be the firm’s long history of setting inappropriate sales goals to the detriment of investors.  Two advisors in Orange County, California, reportedly sent a similar letter in early 2018.  According to the whistleblowers, the bank reportedly pressured advisors to steer wealthy clients into investment fiduciary services, where they would be charged a higher management fee, and issued quotas for risky alternative investments, including private equity and hedge fund investments, pressuring advisors to sell those investments without necessarily considering whether those investments were suitable.  The whistleblowers also claim Wells Fargo steered clients into its proprietary products and mutual funds, where the bank would earn additional management fees, and strongly pushed its advisors to sell a boatload of variable annuities in 2015–before the Department of Labor’s fiduciary rule (now dead) took place. 

Regulators levied a series of record-breaking fines and sanctions against Wells Fargo in 2016-2018.  As regulators continue their investigation into Wells Fargo’s wealth management division, it is only a matter of time until the other shoe drops. 

Shustak Reynolds & Partners, P.C.’s California FINRA attorneys routinely represent broker-dealers and financial advisors in arbitrations, financial advisor transitions, broker protocol disputes and related matters. Please contact us today for a confidential, complimentary consultation.

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