Wells Fargo to Restructure Wealth Management Business
June 18 2018 - 5:53PM
Dow Jones News
By Emily Glazer
Wells Fargo & Co. is expected to announce a restructuring of
its wealth management business, according to people familiar with
the matter, as it grapples with government investigations tied to
client referrals and other related matters.
The bank is planning to combine two large divisions within the
business, known internally as Wealth Brokerage Services and Private
Client Group, the people said. Both are brokerages serving mass
affluent customers. The private client group has about 9,500
brokers who work out of Wells Fargo's brokerage offices, and Wealth
Brokerage Services has around 3,400 brokers who work out of retail
bank branches.
A Wells Fargo spokeswoman said the bank's "Wealth and Investment
Management group is reimagining our business to become more
efficient" but "no final decisions have been made." She added that
the bank will continue to serve wealth management clients across
several channels.
The expected changes come against the backdrop of tumult within
the wealth management business, which has been the subject of
whistleblower complaints that led to an independent investigation
and probes from the Justice Department, Securities and Exchange
Commission and Labor Department, The Wall Street Journal has
reported.
The bank is expected to share some information about the changes
this week in an internal memo to some employees, a person familiar
with the matter said. It may share more details on Thursday, when
Jon Weiss, the head of Wells Fargo's wealth and investment
management unit, is scheduled to host an internal town hall, some
of the people said. The changes aren't expected to affect clients,
they said.
During the bank's investor day presentation in mid-May, Mr.
Weiss detailed "transformation and cost savings," including better
coordination across businesses and operations.
Wells Fargo has around 14,400 advisers, including those catering
to wealthier individuals, with the majority in its retail
brokerage. The bank doesn't break out financial metrics for its
brokerage division, but the wealth and investment management unit
brings in around 9% of overall bank profits, or $714 million in the
first quarter of 2018.
The details of the consolidation are still in flux. The bank is
considering reducing around 1,000 jobs through attrition, some of
the people said. The two divisions currently have their own back
office and compliance staffs, they said.
The bank has also discussed cutting around 100 regional managers
within the business, and it may ask regional managers to reapply
for their roles, some of the people said. Wells Fargo asked retail
banking regional managers to reapply when it restructured that
business in the wake of its sales-practices scandal.
Wells Fargo disclosed in a March securities filing it was
conducting an independent review of the wealth-management
business.
At the time, the bank said it was assessing "whether there have
been inappropriate referrals or recommendations, including with
respect to rollovers for 401(k) plan participants, certain
alternative investments, or referrals of brokerage customers to the
company's investment and fiduciary services business."
Wells Fargo also disclosed that it was reviewing fee
calculations within certain fiduciary and custody accounts. The
bank has found instances of incorrect fees applied to certain
assets and accounts that resulted in overcharging customers,
according to the March filing.
Write to Emily Glazer at emily.glazer@wsj.com
(END) Dow Jones Newswires
June 18, 2018 17:38 ET (21:38 GMT)
Copyright (c) 2018 Dow Jones & Company, Inc.
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