The SEC received four letters from Wells Fargo wealth advisers in Phoenix and two from wealth advisers in Orange County. The letters told the same story. In order to qualify for an incentive program, based on revenue, advisers to Wells customers with accounts in Wells’ wealth unit directed their clients into investment products in which Wells was the majority owner. The result was that the advisers collected revenue that counted for their goals, but, because they had steered their clients into Wells products, Wells earned management fees on the investments.
The incentive program worked like this: Advisers had goals of $64,000 in annual product sales for private-bank clients, or those with assets above $2.5 million on the Investment Fiduciary Services platform. If they didn’t hit the target, they were removed from top branches.
Wells says it has controls in place to prevent such placements. Might want to check those controls. More to come.