A top Wells Fargo executive rebutted a Bloomberg News report that an overly aggressive sales culture permeated the bank's wealth management division.
Bloomberg reported that some of the bank's wealth management clients were steered into investments that maximized Wells Fargo's revenues and brokers' compensation, and those investments were not always in clients' best interests.
The report "did not accurately reflect how we do business and serve our clients,” Jon Weiss, Wells Fargo’s head of wealth and investment management, said in an open letter to employees and clients.
The story "omitted important information" and mischaracterized compensation practices within Wells Fargo's wealth management unit, Weiss said.
The San Francisco-based bank has been subject to a number of regulatory actions stemming from scandals in recent years, including the opening of millions of accounts without customers’ authorization. That resulted in Wells Fargo being fined $185 million by regulators, among other actions. Most recently, The Wall Street Journal reported that the bank's board of directors had opened an investigation into wealth management sales practices following an inquiry from the Department of Justice. The bank also reported that internal investigation in an SEC filing.
"We are making significant progress in our work to identify and fix issues, make things right and build a better, stronger company," Weiss said.
With regard to the Bloomberg report, Weiss said that financial advisors were not incentivized to open accounts.
"Our compensation plans are designed to recognize client-focused behavior, and any assertion to the contrary is simply incorrect," he said.
Wells Fargo also places a strong emphasis on financial planning with clients, and advisors use a tool called Envision to develop plans to meet client goals, Weiss said.
A Wells Fargo spokeswoman declined to comment further on Weiss's letter.
The bank has made changes in recent years to its compensation plan. In December 2016, Wells Fargo Advisors cut some bonuses, including one that enabled advisors at the wirehouse to earn an additional $100,000 for growth in lending credits.